Let Jacksonville Appraisal Services, Inc. dba Jax Appraisals help you determine if you can eliminate your PMIA 20% down payment is usually accepted when purchasing a home. The lender's only risk is often just the difference between the home value and the amount remaining on the loan, so the 20% adds a nice cushion against the expenses of foreclosure, reselling the home, and natural value fluctuations on the chance that a borrower doesn't pay.The market was accepting down payments dropping to 10, 5 and frequently 0 percent in the peak of last decade's mortgage boom. How does a lender manage the additional risk of the small down payment? The answer is Private Mortgage Insurance or PMI. This added plan guards the lender in the event a borrower is unable to pay on the loan and the market price of the home is less than the balance of the loan. PMI is costly to a borrower in that the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and many times isn't even tax deductible. Separate from a piggyback loan where the lender takes in all the costs, PMI is favorable for the lender because they acquire the money, and they get the money if the borrower doesn't pay.
How buyers can keep from bearing the cost of PMIAs a result of The Homeowners Protection Act of 1998, lenders are required to automatically stop the PMI when the principal balance of the loan equals 78 percent of the initial loan amount on most loans. The law guarantees that, upon request of the home owner, the PMI must be abandoned when the principal amount reaches only 80 percent. So, wise home owners can get off the hook a little early.Since it can take many years to reach the point where the principal is only 80% of the initial amount of the loan, it's necessary to know how your Florida home has appreciated in value. After all, all of the appreciation you've achieved over time counts towards dismissing PMI. So why should you pay it after your loan balance has fallen below the 80% threshold? Your neighborhood may not adhere to national trends and/or your home may have acquired equity before the economy cooled off. So even when nationwide trends predict a reduction in home values, you should realize that real estate is local. The hardest thing for most homeowners to figure out is whether their home equity has exceeded the 20% point. An accredited, Florida licensed real estate appraiser can definitely help. Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job! At Jacksonville Appraisal Services, Inc. dba Jax Appraisals, we know when property values have risen or declined. We're experts at recognizing value trends in Jacksonville, Aiken County, and surrounding areas. When faced with data from an appraiser, the mortgage company will usually remove the PMI with little trouble. At which time, the home owner can delight in 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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