Christian Santana can help you remove your Private Mortgage Insurance
It's widely inferred that a 20% down payment is common 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 expenses of foreclosure, selling the home again, and natural value changes in the event a purchaser defaults.
The market was accepting down payments down to 10, 5 and often 0 percent during the mortgage boom of the mid 2000s. A lender is able to handle the increased risk of the minimal down payment with Private Mortgage Insurance or PMI. This added plan covers the lender in case a borrower doesn't pay on the loan and the market price of the house is lower than what the borrower still owes on the loan.
Since the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and many times isn't even tax deductible, PMI is costly to a borrower. Contradictory to a piggyback loan where the lender consumes all the damages, PMI is beneficial for the lender because they obtain the money, and they get paid if the borrower defaults.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How can a homebuyer keep from bearing the expense of PMI?
The Homeowners Protection Act of 1998 obligates the lenders on most loans to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the original 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, savvy home owners can get off the hook a little earlier.
It can take countless years to get to the point where the principal is only 20% of the initial amount borrowed, so it's essential to know how your home has appreciated in value. After all, all of the appreciation you've gained over time counts towards removing PMI. So why pay it after the balance of your loan has dropped below the 80% mark? Even when nationwide trends predict decreasing home values, realize that real estate is local. Your neighborhood may not be reflecting the national trends and/or your home might have secured equity before things simmered down.
A certified, licensed real estate appraiser can help home owners understand just when their home's equity goes over the 20% point, as it's a difficult thing to know. As appraisers, it's our job to recognize the market dynamics of our area. At Christian Santana, we know when property values have risen or declined. We're experts at identifying value trends in Orlando, Orange County and surrounding areas. Faced with figures from an appraiser, the mortgage company will often do away with the PMI with little anxiety. At which time, the home owner can relish the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: