Have equity in your home? Want a lower payment? An appraisal from Western Trend Appraisal Group can help you get rid of your PMI.When purchasing a home, a 20% down payment is usually the standard. The lender's only liability is typically just the remainder between the home value and the amount outstanding on the loan, so the 20% adds a nice buffer against the charges of foreclosure, reselling the home, and regular value changes in the event a purchaser defaults.During the recent mortgage boom of the mid 2000s, it became customary to see lenders reducing down payments to 10, 5 or often 0 percent. A lender is able to endure the added risk of the small down payment with Private Mortgage Insurance or PMI. PMI protects the lender in case a borrower defaults on the loan and the value of the house is lower than what the borrower still owes on the loan. Because the $40-$50 a month per $100,000 borrowed is rolled into the mortgage payment and many times isn't even tax deductible, PMI can be costly to a borrower. It's lucrative for the lender because they secure the money, and they are covered if the borrower doesn't pay, in contrast to a piggyback loan where the lender takes in all the deficits.
How home buyers can avoid paying PMIWith the passage of The Homeowners Protection Act of 1998, lenders are forced to automatically terminate the PMI when the principal balance of the loan reaches 78 percent of the original loan amount on nearly all loans. Smart home owners can get off the hook ahead of time. The law promises that, upon request of the home owner, the PMI must be abandoned when the principal amount equals only 80 percent.Because it can take a significant number of years to reach the point where the principal is only 80% of the initial amount of the loan, it's important to know how your Arizona home has appreciated in value. After all, every bit of appreciation you've achieved over the years counts towards removing PMI. So why should you pay it after the balance of your loan has fallen below the 80% mark? Even when nationwide trends predict lower overall home values, realize that real estate is local. Your neighborhood might not be reflecting the national trends and/or your home might have gained equity before things declined. The toughest thing for almost all people to determine is just when their home's equity rises above the 20% point. A certified, Arizona licensed real estate appraiser can surely help. It is an appraiser's job to understand the market dynamics of their area. At Western Trend Appraisal Group, we know when property values have risen or declined. We're masters at determining value trends in Gilbert, Maricopa County, and surrounding areas. When faced with data from an appraiser, the mortgage company will generally do away with 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: Cancellation of Private Mortgage Insurance: Federal Law May Save You Hundreds of Dollars Each Year
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