Have equity in your home? Want a lower payment? An appraisal from Lewis S. Lerman Associates can help you get rid of your PMI.A 20% down payment is usually accepted when getting a mortgage. Because the risk for the lender is generally only the remainder between the home value and the sum remaining on the loan, the 20% adds a nice cushion against the expenses of foreclosure, reselling the home, and natural value changes on the chance that a purchaser doesn't pay.
Lenders were working with down payments as low as 10, 5 and even 0 percent in the peak of last decade's mortgage boom. A lender is able to endure the additional risk of the reduced down payment with Private Mortgage Insurance or PMI. PMI covers the lender in the event a borrower defaults on the loan and the value of the home is less than the loan balance.
PMI is pricey to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and on many occasions isn't even tax deductible. It's money-making for the lender because they secure the money, and they get paid if the borrower doesn't pay, different from a piggyback loan where the lender takes in all the damages.
How can home buyers keep from paying PMI?With the implementation of The Homeowners Protection Act of 1998, lenders are required to automatically eliminate the PMI when the principal balance of the loan equals 78 percent of the initial loan amount on nearly all loans. The law guarantees that, upon request of the home owner, the PMI must be dropped when the principal amount reaches just 80 percent. So, keen home owners can get off the hook ahead of time.
It can take a significant number of years to reach the point where the principal is only 80% of the initial amount of the loan, so it's necessary to know how your Pennsylvania home has grown in value. After all, every bit of appreciation you've gained over time counts towards dismissing PMI. So why should you pay it after your loan balance has fallen below the 80% mark? Even when nationwide trends signify falling home values, realize that real estate is local. Your neighborhood may not be heeding the national trends and/or your home may have secured equity before things declined.
A certified, Pennsylvania licensed real estate appraiser can help homeowners figure out if their equity has exceeed the 20% point, as it's a difficult thing to know. Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job! At Lewis S. Lerman Associates, we know when property values have risen or declined. We're experts at analyzing value trends in Dresher, Montgomery County, and surrounding areas. When faced with information from an appraiser, the mortgage company will often do away with the PMI with little trouble. 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:
Cancellation of Private Mortgage Insurance: Federal Law May Save You Hundreds of Dollars Each Year