Palm Appraisals can help you remove your Private Mortgage InsuranceA 20% down payment is usually the standard when buying a house. Because the risk for the lender is generally only the remainder between the home value and the sum outstanding on the loan, the 20% provides a nice cushion against the expenses of foreclosure, selling the home again, and natural value changes in the event a purchaser defaults.
During the recent mortgage boom of the mid 2000s, it was customary to see lenders only asking for down payments of 10, 5, 3 or sometimes 0 percent. How does a lender handle the increased risk of the small down payment? The answer is Private Mortgage Insurance or PMI. This supplementary plan protects the lender if a borrower doesn't pay on the loan and the market price of the home is less than what the borrower still owes on the loan.
PMI can be costly to a borrower because the $40-$50 a month per $100,000 borrowed is rolled into the mortgage payment and on many occasions isn't even tax deductible. It's beneficial for the lender because they acquire the money, and they get paid if the borrower doesn't pay, unlike a piggyback loan where the lender consumes all the losses.
Has your real estate appreciated since you first purchased? Call Palm Appraisals today at (800) 252-6633. You may be able to get rid of your Private Mortgage Insurance payment.
How can homebuyers keep from paying PMI?The Homeowners Protection Act of 1998 makes the lenders on most loans to automatically stop the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount. Wise home owners can get off the hook a little early. The law pledges that, at the request of the home owner, the PMI must be dropped when the principal amount reaches only 80 percent.
Considering it can take many years to reach the point where the principal is just 80% of the initial amount borrowed, it's crucial to know how your Florida home has grown in value. After all, all of the appreciation you've gained over time counts towards abolishing PMI. So why should you pay it after the balance of your loan has fallen below the 80% threshold? Even when nationwide trends indicate lower overall home values, be aware that real estate is local. Your neighborhood might not be heeding the national trends and/or your home may have acquired equity before things cooled off.
A certified, Florida licensed real estate appraiser can help homeowners figure out just when their home's equity goes over the 20% point, as it's a difficult thing to know. It's an appraiser's job to understand the market dynamics of their area. At Palm Appraisals, we're experts at identifying value trends in Oklahoma City, Oklahoma County, and surrounding areas, and we know when property values have risen or declined. Faced with figures from an appraiser, the mortgage company will most often remove the PMI with little anxiety. At that time, the homeowner can relish the savings from that point on.
The savings from getting rid of the PMI required when you got your mortgage pays for the appraisal in a matter of months. Palm Appraisals are experts when it comes to real estate value trends in Oklahoma City and Oklahoma County. Contact us today.
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