Appraisal Evaluation Technical Services, Inc. can help you remove your Private Mortgage InsuranceIt's largely known that a 20% down payment is common when getting a mortgage. The lender's risk is oftentimes only the difference between the home value and the balance remaining on the loan, so the 20% supplies a nice cushion against the expenses of foreclosure, selling the home again, and regular value variations on the chance that a purchaser is unable to pay.The market was taking down payments dropping to 10, 5 and often 0 percent in the peak of last decade's mortgage boom. How does a lender manage the additional risk of the low down payment? The answer is Private Mortgage Insurance or PMI. This additional plan takes care of the lender in case a borrower is unable to pay on the loan and the value of the property is less than what is owed on the loan. Because the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and on many occasions isn't even tax deductible, PMI is costly to a borrower. It's lucrative for the lender because they collect the money, and they get the money if the borrower doesn't pay, unlike a piggyback loan where the lender consumes all the costs.
How homebuyers can keep from paying PMIWith the implementation of The Homeowners Protection Act of 1998, lenders are forced to automatically stop the PMI when the principal balance of the loan equals 78 percent of the initial loan amount on most loans. Savvy home owners can get off the hook beforehand. The law stipulates that, upon request of the homeowner, the PMI must be released when the principal amount equals just 80 percent.It can take many years to get to the point where the principal is just 80% of the original loan amount, so it's necessary to know how your Virginia home has appreciated in value. After all, all of the appreciation you've gained over the years counts towards removing PMI. So why should you pay it after the balance of your loan has dropped below the 80% mark? Your neighborhood may not conform to national trends and/or your home might have secured equity before things cooled off. So even when nationwide trends indicate declining home values, you should realize that real estate is local. An accredited, Virginia licensed real estate appraiser can help home owners figure out if their equity has exceeed the 20% point, as it's a tough thing to know. Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job! At Appraisal Evaluation Technical Services, Inc., we know when property values have risen or declined. We're masters at identifying value trends in Yorktown, York County, and surrounding areas. Faced with information from an appraiser, the mortgage company will usually drop the PMI with little trouble. At that time, the home owner can retain 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
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