Have equity in your home? Want a lower payment? An appraisal from Behrens Appraisal Services can help you get rid of your PMI.A 20% down payment is usually accepted when getting a mortgage. The lender's risk is usually only the remainder between the home value and the balance remaining on the loan, so the 20% provides a nice cushion against the expenses of foreclosure, selling the home again, and typical value variations on the chance that a purchaser doesn't pay.
The market was working with down payments as low as 10, 5 and even 0 percent in the peak of last decade's mortgage boom. A lender is able to handle the added risk of the low down payment with Private Mortgage Insurance or PMI. This added plan covers the lender in the event a borrower doesn't pay on the loan and the value of the house is less than what the borrower still owes on the loan.
PMI can be expensive to a borrower in that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and often isn't even tax deductible. It's favorable for the lender because they secure the money, and they receive payment if the borrower doesn't pay, in contrast to a piggyback loan where the lender takes in all the costs.
How can homeowners refrain from paying PMI?As a result of The Homeowners Protection Act of 1998, lenders are forced to automatically stop the PMI when the principal balance of the loan reaches 78 percent of the original loan amount on nearly all loans. Wise home owners can get off the hook beforehand. The law guarantees that, upon request of the home owner, the PMI must be abandoned when the principal amount equals just 80 percent.
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 Iowa home has increased in value. After all, all of the appreciation you've acquired over time counts towards dismissing PMI. So why pay it after your loan balance has dropped below the 80% mark? Your neighborhood may not conform to national trends and/or your home might have secured equity before things declined. So even when nationwide trends hint at decreasing home values, you should know most importantly that real estate is local.
A certified, Iowa licensed real estate appraiser can help homeowners figure out just when their home's equity goes over the 20% point, as it's a tough thing to know. It is an appraiser's job to keep up with the market dynamics of their area. At Behrens Appraisal Services, we know when property values have risen or declined. We're masters at pinpointing value trends in Council Blfs, Pottawattamie County, and surrounding areas. When faced with figures from an appraiser, the mortgage company will often eliminate the PMI with little anxiety. At that time, the home owner can relish the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: