Have equity in your home? Want a lower payment? An appraisal from Laramie Peak Appraisal Service, LLC can help you get rid of your PMI.When buying a house, a 20% down payment is usually the standard. The lender's liability is usually only the difference between the home value and the balance remaining on the loan, so the 20% supplies a nice cushion against the charges of foreclosure, selling the home again, and natural value fluctuations on the chance that a borrower doesn't pay.Banks were taking down payments as low as 10, 5 and often 0 percent in the peak of last decade's mortgage boom. How does a lender manage the additional risk of the low down payment? The answer is Private Mortgage Insurance or PMI. PMI guards the lender in the event a borrower is unable to pay on the loan and the value of the house is lower than the loan balance. PMI can be costly to a borrower in that the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and oftentimes isn't even tax deductible. It's advantageous for the lender because they secure the money, and they receive payment if the borrower doesn't pay, different from a piggyback loan where the lender consumes all the deficits.
How can a buyer prevent paying PMI?The Homeowners Protection Act of 1998 requires the lenders on most loans to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the initial loan amount. Smart home owners can get off the hook beforehand. The law promises that, at the request of the homeowner, the PMI must be released when the principal amount equals only 80 percent.It can take a significant number of years to reach the point where the principal is only 80% of the initial amount borrowed, so it's crucial to know how your Wyoming home has increased in value. After all, any appreciation you've achieved over time counts towards abolishing PMI. So why pay it after your loan balance has fallen below the 80% mark? Even when nationwide trends indicate falling home values, understand that real estate is local. Your neighborhood might not be minding the national trends and/or your home might have acquired equity before things simmered down. The toughest thing for many consumers to figure out is just when their home's equity goes over the 20% point. An accredited, Wyoming licensed real estate appraiser can definitely help. As appraisers, it's our job to keep up with the market dynamics of our area. At Laramie Peak Appraisal Service, LLC, we know when property values have risen or declined. We're experts at determining value trends in Douglas, Converse County, and surrounding areas. Faced with information from an appraiser, the mortgage company will generally do away with the PMI with little anxiety. At that time, the homeowner can retain 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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