Let Blue Water Appraisals help you determine if you can get rid of your PMIWhen buying a house, a 20% down payment is usually the standard. The lender's risk is oftentimes only the remainder between the home value and the amount due on the loan, so the 20% adds a nice buffer against the charges of foreclosure, selling the home again, and regular value changes on the chance that a borrower is unable to pay. Lenders were working with down payments as low as 10, 5 and even 0 percent during the mortgage boom of the mid 2000s. How does a lender endure the increased risk of the low down payment? The answer is Private Mortgage Insurance or PMI. PMI guards the lender in the event a borrower doesn't pay on the loan and the market price of the property is less than the balance of the loan. PMI is pricey to a borrower in that the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and many times isn't even tax deductible. It's profitable for the lender because they secure the money, and they receive payment if the borrower doesn't pay, unlike a piggyback loan where the lender consumes all the losses. 
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How can homeowners refrain from bearing the cost of PMI?With the implementation of The Homeowners Protection Act of 1998, on most loans lenders are required to automatically terminate the PMI when the principal balance of the loan equals 78 percent of the primary loan amount. Wise homeowners can get off the hook ahead of time. The law guarantees that, upon request of the home owner, the PMI must be released when the principal amount reaches just 80 percent. Because it can take countless years to arrive at the point where the principal is only 20% of the initial amount borrowed, it's necessary to know how your home has grown in value. After all, any appreciation you've accomplished over the years counts towards abolishing PMI. So why pay it after the balance of your loan has fallen below the 80% mark? Despite the fact that nationwide trends indicate decreasing home values, realize that real estate is local. Your neighborhood might not be reflecting the national trends and/or your home might have secured equity before things settled down. A certified, licensed real estate appraiser can help homeowners understand just when their home's equity rises above the 20% point, as it's a difficult thing to know. It's an appraiser's job to recognize the market dynamics of their area. At Blue Water Appraisals, we're masters at analyzing value trends in North Fort Myers, Lee County and surrounding areas, and we know when property values have risen or declined. Faced with figures from an appraiser, the mortgage company will generally eliminate the PMI with little anxiety. At which time, the homeowner can relish the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: |