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Have equity in your home? Want a lower payment? An appraisal from Asset Appraisal Services can help you get rid of your PMI.
It's typically known that a 20% down payment is accepted when purchasing a home.
The lender's risk is usually only the remainder between the home value and the sum due on the loan, so the 20% supplies a nice buffer against the charges of foreclosure, selling the home again, and typical value variations on the chance that a borrower is unable to pay.
Lenders were working with down payments dropping to 10, 5 and frequently 0 percent during the mortgage boom of the last decade.
How does a lender handle the increased risk of the low down payment? The solution is Private Mortgage Insurance or PMI.
PMI guards the lender if a borrower defaults on the loan and the value of the house is lower than the loan balance.
Since the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and many times isn't even tax deductible, PMI can be pricey to a borrower.
It's advantageous for the lender because they acquire the money, and they receive payment if the borrower defaults, in contrast to a piggyback loan where the lender takes in all the costs.
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Has your real estate appreciated since you first purchased? Call Asset Appraisal Services today at 509-599-0070. You may be able to save money by removing your Private Mortgage Insurance payment.
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How can a homeowner prevent paying PMI?
The Homeowners Protection Act of 1998 forces the lenders on most loans to automatically stop the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount.
Savvy home owners can get off the hook sooner than expected. The law designates that, upon request of the homeowner, the PMI must be dropped when the principal amount reaches just 80 percent.
It can take several years to get to the point where the principal is only 80% of the initial amount of the loan, so it's necessary to know how your Washington home has grown in value.
After all, all of the appreciation you've obtained over the years counts towards removing PMI. So why pay it after the balance of your loan has fallen below the 80% threshold?
Your neighborhood might not conform to national trends and/or your home might have secured equity before the economy cooled off. So even when nationwide trends hint at decreasing home values, you should understand that real estate is local.
A certified, Washington licensed real estate appraiser can help home owners figure out if their equity has reached the 20% point, as it's a hard thing to know.
It's an appraiser's job to know the market dynamics of their area.
At Asset Appraisal Services, we're experts at pinpointing value trends in Spokane, Spokane County, and surrounding areas, and we know when property values have risen or declined.
Faced with data from an appraiser, the mortgage company will often drop the PMI with little trouble. At that time, the homeowner can delight in the savings from that point on.
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Did you secure your mortgage with less than 20% down? Contact Asset Appraisal Services today at 509-599-0070 to see if you can cancel your Private Mortgage Insurance payment.
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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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