Let Lenders Appraisal Service, Inc. help you discover if you can cancel your PMI
A 20% down payment is typically the standard when buying a house. Because the risk for the lender is often only the remainder between the home value and the amount due on the loan, the 20% adds a nice buffer against the costs of foreclosure, selling the home again, and regular value fluctuations in the event a purchaser is unable to pay.
The market was working with down payments dropping to 10, 5 and frequently 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. This supplementary policy covers the lender in case a borrower defaults on the loan and the market price of the house is less than what the borrower still owes on the loan.
PMI is costly to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and often isn't even tax deductible. It's beneficial for the lender because they secure the money, and they get the money if the borrower defaults, in contrast to a piggyback loan where the lender takes in all the costs.
Does your monthly mortgage payment include a fee PMI? Call Lenders Appraisal Service, Inc. today at (612) 240-2535 or send us an e-mail. Documentation of your home's present value could save you thousands.
How can home owners avoid bearing the cost of PMI?
The Homeowners Protection Act of 1998 obligates the lenders on nearly all loans to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the initial loan amount. The law stipulates that, at the request of the home owner, the PMI must be abandoned when the principal amount reaches only 80 percent. So, keen home owners can get off the hook ahead of time.
Considering it can take a significant number of years to get to the point where the principal is just 80% of the initial amount of the loan, it's important to know how your Minnesota home has grown in value. After all, all of the appreciation you've gained over the years counts towards dismissing PMI. So why pay it after your loan balance has fallen below the 80% threshold? Your neighborhood may not follow national trends and/or your home might have secured equity before things simmered down. So even when nationwide trends indicate falling home values, you should know most importantly that real estate is local.
A certified, Minnesota licensed real estate appraiser can help homeowners figure out if their equity has made it to the 20% point, as it's a hard thing to know. Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job! At Lenders Appraisal Service, Inc., we know when property values have risen or declined. We're experts at analyzing value trends in Saint Paul, Dakota County, and surrounding areas. When faced with figures from an appraiser, the mortgage company will often cancel the PMI with little effort. At which time, the home owner can relish the savings from that point on.
Has your home value appreciated since you first purchased? Contact Lenders Appraisal Service, Inc. today at (612) 240-2535. You may be able to cancel your Private Mortgage Insurance payment.
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