Have equity in your home? Want a lower payment? An appraisal from Betsy Millson Appraisal can help you get rid of your PMI.A 20% down payment is usually accepted when purchasing a home. Since the risk for the lender is oftentimes 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, reselling the home, and natural value fluctuationson the chance that a purchaser defaults. During the recent mortgage upturn of the last decade, it became widespread to see lenders taking down payments of 10, 5 or often 0 percent. How does a lender endure the additional risk of the low down payment? The answer is Private Mortgage Insurance or PMI. This added policy guards the lender in case a borrower defaults on the loan and the worth of the property is lower than the balance of the loan. Because the $40-$50 a month per $100,000 borrowed is lumped into the mortgage monthly payment and often isn't even tax deductible, PMI can be expensive to a borrower. Separate from a piggyback loan where the lender absorbs all the costs, PMI is money-making for the lender because they collect the money, and they get the money if the borrower doesn't pay. 
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How can home buyers prevent paying PMI?With the employment of The Homeowners Protection Act of 1998, on most loans lenders are obligated to automatically terminate the PMI when the principal balance of the loan equals 78 percent of the initial loan amount. The law states that, at the request of the home owner, the PMI must be abandoned when the principal amount reaches only 80 percent. So, savvy home owners can get off the hook sooner than expected. Since it can take many years to arrive at the point where the principal is only 20% of the initial loan amount, it's crucial to know how your home has increased in value. After all, any appreciation you've obtained over the years counts towards dismissing PMI. So what's the reason for paying it after your loan balance has dropped below the 80% mark? Even when nationwide trends forecast decreasing home values, be aware that real estate is local. Your neighborhood might not be adhering to the national trends and/or your home may have gained equity before things settled down. An accredited, licensed real estate appraiser can help home owners understand just when their home's equity rises above the 20% point, as it's a tough thing to know. It is an appraiser's job to keep up with the market dynamics of their area. At Betsy Millson Appraisal, we're masters at pinpointing value trends in Leesburg, Loudoun County and surrounding areas, and we know when property values have risen or declined. Faced with information from an appraiser, the mortgage company will generally remove the PMI with little anxiety. 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: |