Have equity in your home? Want a lower payment? An appraisal from Abaco Appraisal Services, LLC can help you get rid of your PMI.When getting a mortgage, a 20% down payment is usually the standard. Considering the liability for the lender is often only the remainder between the home value and the sum due on the loan, the 20% provides a nice buffer against the expenses of foreclosure, reselling the home, and natural value changes on the chance that a borrower is unable to pay.Lenders were taking down payments discounted to 10, 5 and often 0 percent in the peak of last decade's mortgage boom. How does a lender manage the added risk of the small down payment? The solution is Private Mortgage Insurance or PMI. This additional policy guards the lender if a borrower is unable to pay on the loan and the value of the home is less than the balance of the loan. Since the $40-$50 a month per $100,000 borrowed is lumped into the mortgage monthly payment and oftentimes isn't even tax deductible, PMI can be costly to a borrower. It's profitable for the lender because they collect the money, and they are covered if the borrower doesn't pay, unlike a piggyback loan where the lender consumes all the deficits.
How can homeowners keep from bearing the cost of PMI?The Homeowners Protection Act of 1998 makes the lenders on nearly all loans to automatically cease the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount. The law pledges that, upon request of the homeowner, the PMI must be released when the principal amount equals only 80 percent. So, smart home owners can get off the hook a little early.Considering it can take a significant number of years to arrive at the point where the principal is only 80% of the original loan amount, it's important to know how your Georgia home has grown in value. After all, every bit of appreciation you've gained over the years counts towards dismissing PMI. So why pay it after your loan balance has dropped below the 80% threshold? Even when nationwide trends indicate falling home values, realize that real estate is local. Your neighborhood might not be heeding the national trends and/or your home might have gained equity before things simmered down. The toughest thing for almost all consumers to figure out is just when their home's equity rises above the 20% point. A certified, Georgia licensed real estate appraiser can surely help. It is an appraiser's job to know the market dynamics of their area. At Abaco Appraisal Services, LLC, we're experts at determining value trends in Kennesaw, Cherokee County, and surrounding areas, and we know when property values have risen or declined. Faced with data from an appraiser, the mortgage company will generally cancel the PMI with little anxiety. At that time, the homeowner can retain 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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