Have equity in your home? Want a lower payment? An appraisal from DANIEL I KANDEL can help you get rid of your PMI.
A 20% down payment is typically accepted when purchasing a home. The lender's liability is generally only the difference 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 on the chance that a borrower is unable to pay.
The market was taking down payments down to 10, 5 and often 0 percent in the peak of last decade's mortgage boom. A lender is able to handle the increased risk of the low down payment with Private Mortgage Insurance or PMI. PMI covers the lender in the event a borrower doesn't pay on the loan and the value of the property is lower than the balance of the loan.
Since the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and frequently isn't even tax deductible, PMI is costly to a borrower. It's beneficial for the lender because they collect the money, and they get the money if the borrower is unable to pay, different from a piggyback loan where the lender absorbs all the costs.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How can a home owner keep from bearing the cost of PMI?
With the utilization of The Homeowners Protection Act of 1998, on most loans lenders are required to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the initial loan amount. Smart home owners can get off the hook ahead of time. The law states that, at the request of the home owner, the PMI must be dropped when the principal amount equals only 80 percent.
It can take many years to arrive at the point where the principal is only 20% of the original amount of the loan, so it's essential to know how your home has increased in value. After all, all of the appreciation you've accomplished over time counts towards removing PMI. So what's the reason for paying it after the balance of your loan has dropped below the 80% threshold? Despite the fact that nationwide trends signify plummeting home values, realize that real estate is local. Your neighborhood may not be heeding the national trends and/or your home could have secured equity before things cooled off.
The difficult thing for most homeowners to understand is just when their home's equity goes over the 20% point. A certified, licensed real estate appraiser can surely help. As appraisers, it's our job to keep up with the market dynamics of our area. At DANIEL I KANDEL, we know when property values have risen or declined. We're experts at pinpointing value trends in Weston/Ft. Lauderdale, Broward County and surrounding areas. Faced with data from an appraiser, the mortgage company will often cancel the PMI with little trouble. At which time, the homeowner can relish the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: