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Have equity in your home? Want a lower payment? An appraisal from The Jones Group can help you get rid of your PMI.
When purchasing a home, a 20% down payment is typically the standard.
The lender's liability is oftentimes only the remainder between the home value and the balance remaining on the loan, so the 20% supplies a nice buffer against the costs of foreclosure, selling the home again, and natural value variations on the chance that a purchaser is unable to pay.
During the recent mortgage upturn of the last decade, it was widespread to see lenders reducing down payments to 10, 5, 3 or even 0 percent.
A lender is able to handle the additional risk of the low down payment with Private Mortgage Insurance or PMI.
PMI guards the lender in the event a borrower is unable to pay on the loan and the market price of the property is less than the balance of the loan.
PMI can be costly to a borrower in that the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and oftentimes isn't even tax deductible.
It's advantageous for the lender because they collect the money, and they receive payment if the borrower defaults, as opposed to a piggyback loan where the lender takes in all the losses.
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The savings from dropping your PMI will make up for the cost of the appraisal in a matter of months. The Jones Group are experts when it comes to value trends in the city of Poway and San Diego County. Contact us today.
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How can a homebuyer prevent bearing the expense of PMI?
As a result of The Homeowners Protection Act of 1998, lenders are required to automatically eliminate the PMI when the principal balance of the loan reaches 78 percent of the initial loan amount on most loans.
Wise home owners can get off the hook a little earlier. The law stipulates that, at the request of the homeowner, the PMI must be dropped when the principal amount equals just 80 percent.
Since it can take a significant number of years to arrive at the point where the principal is just 80% of the original amount borrowed, it's necessary to know how your Oklahoma home has increased in value.
After all, every bit of appreciation you've accomplished over the years counts towards removing PMI. So what's the reason for paying it after the balance of your loan has dropped below the 80% threshold?
Your neighborhood may not follow national trends and/or your home may have secured equity before the economy declined. So even when nationwide trends hint at decreasing home values, you should realize that real estate is local.
The hardest thing for most people to figure out is just when their home's equity rises above the 20% point. A certified, Oklahoma licensed real estate appraiser can definitely help.
Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job!
At The Jones Group, we know when property values have risen or declined. We're experts at pinpointing value trends in Poway, San Diego County, and surrounding areas.
When faced with information from an appraiser, the mortgage company will generally do away with the PMI with little anxiety. At which time, the homeowner can relish the savings from that point on.
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The savings from dropping the PMI required when you got your mortgage will make up for the cost of the appraisal in a matter of months. The Jones Group is in the business of tracking real estate value trends in Poway and San Diego County. Contact us today.
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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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