Let American Home - Residential Appraisers, LLC help you learn if you can cancel your PMI
A 20% down payment is usually the standard when purchasing a home. The lender's only exposure is typically just the remainder between the home value and the sum due on the loan, so the 20% adds a nice buffer against the costs of foreclosure, reselling the home, and natural value fluctuations on the chance that a borrower is unable to pay.
During the recent mortgage boom of the last decade, it was customary to see lenders making deals with down payments of 10, 5 or often 0 percent. How does a lender manage the added risk of the small down payment? The answer is Private Mortgage Insurance or PMI. This added plan covers the lender if a borrower is unable to pay on the loan and the market price of the home is lower than the loan balance.
PMI is costly to a borrower in that the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and frequently isn't even tax deductible. It's money-making for the lender because they collect the money, and they receive payment if the borrower is unable to pay, different from a piggyback loan where the lender absorbs all the deficits.
Has your home value appreciated since you first purchased? Contact American Home - Residential Appraisers, LLC today at (702) 644-6330. You may be able to save money by removing your Private Mortgage Insurance payment.
How can a buyer keep from paying PMI?
The Homeowners Protection Act of 1998 obligates the lenders on most loans to automatically eliminate the PMI when the principal balance of the loan reaches 78 percent of the original loan amount. The law promises that, at the request of the homeowner, the PMI must be dropped when the principal amount reaches just 80 percent. So, acute homeowners can get off the hook sooner than expected.
It can take several years to arrive at the point where the principal is just 80% of the original amount of the loan, so it's essential to know how your Nevada home has increased in value. After all, any appreciation you've gained over the years counts towards removing PMI. So why pay it after the balance of your loan has dropped below the 80% threshold? Even when nationwide trends predict falling home values, be aware that real estate is local. Your neighborhood may not be heeding the national trends and/or your home may have acquired equity before things simmered down.
The hardest thing for almost all consumers to determine is just when their home's equity goes over the 20% point. An accredited, Nevada licensed real estate appraiser can definitely help. It's an appraiser's job to recognize the market dynamics of their area. At American Home - Residential Appraisers, LLC, we're experts at recognizing value trends in Henderson, Clark County, and surrounding areas, and we know when property values have risen or declined. Faced with information from an appraiser, the mortgage company will most often cancel the PMI with little effort. At which time, the homeowner can enjoy the savings from that point on.
Is PMI something increasing your monthly house payment? Call American Home - Residential Appraisers, LLC today at (702) 644-6330 or send us an e-mail. A new appraisal could save you thousands.
Want to learn more about PMI and the Homeowners Protection Act? Click this link:
