Let Santa Fe Appraisal Group, Inc. help you learn if you can cancel your PMIA 20% down payment is usually the standard when purchasing a home. Since the liability for the lender is often only the remainder between the home value and the amount remaining on the loan, the 20% supplies a nice buffer against the charges of foreclosure, selling the home again, and regular value variationsin the event a purchaser defaults. The market was accepting down payments as low as 10, 5 and even 0 percent in the peak of last decade's mortgage boom. How does a lender endure the additional risk of the small down payment? The solution is Private Mortgage Insurance or PMI. PMI takes care of the lender if a borrower defaults on the loan and the market price of the property is lower than what is owed on the loan. PMI can be costly to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and often isn't even tax deductible. It's money-making for the lender because they collect the money, and they get paid if the borrower defaults, opposite from a piggyback loan where the lender absorbs all the losses.  Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How can home owners avoid paying PMI?With the employment of The Homeowners Protection Act of 1998, on most loans lenders are obligated to automatically terminate the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount. The law guarantees that, upon request of the home owner, the PMI must be released when the principal amount equals only 80 percent. So, savvy homeowners can get off the hook ahead of time. It can take countless years to get to the point where the principal is only 20% of the initial amount borrowed, so it's necessary to know how your home has increased in value. After all, every bit of appreciation you've acquired over time counts towards dismissing PMI. So what's the reason for paying it after your loan balance has dropped below the 80% mark? Despite the fact that nationwide trends indicate plummeting home values, be aware that real estate is local. Your neighborhood might not be minding the national trends and/or your home might have secured equity before things cooled off. The hardest thing for many homeowners to know is just when their home's equity goes over the 20% point. An accredited, licensed real estate appraiser can surely help. It's an appraiser's job to understand the market dynamics of their area. At Santa Fe Appraisal Group, Inc., we know when property values have risen or declined. We're masters at analyzing value trends in Santa Fe, Santa Fe County and surrounding areas. When faced with information from an appraiser, the mortgage company will often drop the PMI with little effort. At which time, the homeowner can enjoy the savings from that point on. Want to learn more about PMI and the Homeowners Protection Act? Click this link: |