Appraising Greater Orlando, Inc. can help you remove your Private Mortgage Insurance
It's generally inferred that a 20% down payment is common when buying a house. Since the risk for the lender is often only the difference between the home value and the sum due on the loan, the 20% provides a nice cushion against the costs of foreclosure, selling the home again, and typical value fluctuations in the event a borrower is unable to pay.
Lenders were taking down payments as low as 10, 5 and frequently 0 percent during the mortgage boom of the mid 2000s. How does a lender manage the added risk of the small down payment? The answer is Private Mortgage Insurance or PMI. PMI covers 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 loan balance.
Since the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and on many occasions isn't even tax deductible, PMI is pricey to a borrower. Unlike a piggyback loan where the lender absorbs all the damages, PMI is favorable for the lender because they obtain the money, and they receive payment if the borrower defaults.
Does your monthly loan payment include a fee PMI? Call Appraising Greater Orlando, Inc. today at 407.353.6228 or send us an e-mail. A recent appraisal could save you thousands.
How homeowners can keep from bearing the cost of PMI
As a result of The Homeowners Protection Act of 1998, lenders are forced to automatically eliminate the PMI when the principal balance of the loan equals 78 percent of the initial loan amount on most loans. The law stipulates that, upon request of the homeowner, the PMI must be abandoned when the principal amount reaches just 80 percent. So, wise homeowners can get off the hook ahead of time.
It can take several years to arrive at the point where the principal is only 80% of the initial loan amount, so it's important to know how your Florida home has increased in value. After all, all of the appreciation you've accomplished over the years counts towards removing PMI. So why should you pay it after the balance of your loan has fallen below the 80% threshold? Your neighborhood may not conform to national trends and/or your home may have secured equity before the economy declined. So even when nationwide trends signify a reduction in home values, you should understand that real estate is local. Sometimes a quick check on the listing or selling prices of homes in your area can be the first indicator of your individual market trends.
An accredited, Florida licensed real estate appraiser can help home owners figure out if their equity has made it to the 20% point, as it's a difficult thing to know. It's an appraiser's job to keep up with the market dynamics of their area. At Appraising Greater Orlando, Inc., we know when property values have risen or declined. We're experts at analyzing value trends in Winter Springs, Seminole County, and surrounding areas. When faced with information from an appraiser, the mortgage company will generally cancel the PMI with little trouble. At which time, the home owner can enjoy the savings from that point on.
Is PMI a part of your monthly house payment? Call Appraising Greater Orlando, Inc. today at 407.353.6228 or send us an e-mail. Documentation of your home's current value could save you thousands.
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