KEY INSIGHT can help you remove your Private Mortgage InsuranceA 20% down payment is typically accepted when purchasing a home. Because the risk for the lender is generally only the difference between the home value and the amount remaining on the loan, the 20% provides a nice buffer against the charges of foreclosure, reselling the home, and natural value variationson the chance that a borrower defaults. During the recent mortgage boom of the mid 2000s, it was customary to see lenders taking down payments of 10, 5 or often 0 percent. How does a lender manage the increased risk of the low down payment? The answer is Private Mortgage Insurance or PMI. This supplemental plan takes care of the lender in the event a borrower is unable to pay on the loan and the value of the property is less than the balance of the loan. Because the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and frequently isn't even tax deductible, PMI can be pricey to a borrower. Separate from a piggyback loan where the lender absorbs all the deficits, PMI is lucrative for the lender because they collect the money, and they receive payment if the borrower is unable to pay. 
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How buyers can refrain from bearing the cost of PMIWith the employment of The Homeowners Protection Act of 1998, on most loans lenders are required to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount. Smart home owners can get off the hook beforehand. The law guarantees that, upon request of the home owner, the PMI must be abandoned when the principal amount equals only 80 percent. Since it can take countless years to arrive at the point where the principal is just 20% of the original amount of the loan, it's necessary to know how your home has grown in value. After all, every bit of appreciation you've achieved over time counts towards abolishing PMI. So why pay it after your loan balance has fallen below the 80% mark? Your neighborhood might not be adopting the national trends and/or your home could have secured equity before things calmed down, so even when nationwide trends forecast declining home values, you should understand that real estate is local. The toughest thing for almost all home owners to understand is just when their home's equity goes over the 20% point. An accredited, licensed real estate appraiser can certainly help. It is an appraiser's job to keep up with the market dynamics of their area. At KEY INSIGHT, we know when property values have risen or declined. We're experts at pinpointing value trends in Rhinelander, Oneida County and surrounding areas. Faced with data from an appraiser, the mortgage company will often cancel the PMI with little anxiety. At which time, the homeowner can delight in the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: |