Have equity in your home? Want a lower payment? An appraisal from Folsom Appraisal Service, LLC can help you get rid of your PMI.When getting a mortgage, a 20% down payment is usually the standard. Because the liability for the lender is often only the remainder between the home value and the sum due on the loan, the 20% supplies a nice cushion against the expenses of foreclosure, selling the home again, and natural value changes on the chance that a borrower is unable to pay.During the recent mortgage boom of the mid 2000s, it was common to see lenders only asking for down payments of 10, 5, 3 or even 0 percent. How does a lender endure the added risk of the small down payment? The answer is Private Mortgage Insurance or PMI. This supplementary policy takes care of the lender in case a borrower defaults on the loan and the market price of the property is lower than what is owed on the loan. PMI can be costly to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and many times isn't even tax deductible. Separate from a piggyback loan where the lender absorbs all the losses, PMI is lucrative for the lender because they secure the money, and they get paid if the borrower doesn't pay.
How can a buyer avoid bearing the cost of PMI?The Homeowners Protection Act of 1998 requires the lenders on nearly all loans to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the original loan amount. Keen home owners can get off the hook a little early. The law promises that, upon request of the homeowner, the PMI must be released when the principal amount reaches only 80 percent.Because it can take a significant number of years to reach the point where the principal is just 80% of the initial loan amount, it's important to know how your Georgia home has increased in value. After all, every bit of appreciation you've accomplished over the years counts towards abolishing PMI. So why pay it after your loan balance has fallen below the 80% mark? Your neighborhood might not adhere to national trends and/or your home could have secured equity before things simmered down. So even when nationwide trends forecast falling home values, you should realize that real estate is local. A certified, Georgia licensed real estate appraiser can help home owners figure out just when their home's equity goes over the 20% point, as it's a hard thing to know. It is an appraiser's job to keep up with the market dynamics of their area. At Folsom Appraisal Service, LLC, we're masters at pinpointing value trends in Americus, Sumter County, and surrounding areas, and we know when property values have risen or declined. When faced with figures from an appraiser, the mortgage company will often eliminate 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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