Have equity in your home? Want a lower payment? An appraisal from Pitcher & Associates, LLC can help you get rid of your PMI.A 20% down payment is typically the standard when getting a mortgage. Since the risk for the lender is oftentimes only the remainder between the home value and the sum due on the loan, the 20% provides a nice cushion against the expenses of foreclosure, selling the home again, and regular value changes in the event a borrower defaults.During the recent mortgage boom of the mid 2000s, it was customary to see lenders making deals with down payments of 10, 5, 3 or often 0 percent. A lender is able to handle the increased risk of the small down payment with Private Mortgage Insurance or PMI. PMI protects the lender in case a borrower doesn't pay on the loan and the value of the house is less than what the borrower still owes on the loan. PMI is pricey to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and frequently isn't even tax deductible. As opposed to a piggyback loan where the lender takes in all the losses, PMI is money-making for the lender because they secure the money, and they get the money if the borrower doesn't pay.
How can a homebuyer refrain from paying PMI?The Homeowners Protection Act of 1998 makes the lenders on nearly all loans to automatically terminate the PMI when the principal balance of the loan reaches 78 percent of the original loan amount. The law states that, upon request of the homeowner, the PMI must be released when the principal amount reaches only 80 percent. So, savvy homeowners can get off the hook sooner than expected.Considering it can take several years to reach the point where the principal is just 80% of the initial loan amount, it's essential to know how your Alabama home has increased in value. After all, any appreciation you've obtained over time counts towards removing PMI. So what's the reason for paying it after your loan balance has fallen below the 80% mark? Your neighborhood might not follow national trends and/or your home might have secured equity before the economy simmered down. So even when nationwide trends signify falling home values, you should realize that real estate is local. A certified, Alabama 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 tough thing to know. Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job! At Pitcher & Associates, LLC, we know when property values have risen or declined. We're experts at pinpointing value trends in Dothan, Houston County, and surrounding areas. When faced with data from an appraiser, the mortgage company will usually drop 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: Cancellation of Private Mortgage Insurance: Federal Law May Save You Hundreds of Dollars Each Year
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