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GMA Appraisal Group can help you remove your Private Mortgage Insurance
It's largely known that a 20% down payment is accepted when purchasing a home.
Because the liability for the lender is generally only the remainder between the home value and the amount remaining on the loan, the 20% provides a nice buffer against the charges of foreclosure, selling the home again, and regular value fluctuations on the chance that a borrower defaults.
Lenders were taking down payments as low as 10, 5 and frequently 0 percent during the mortgage boom of the last decade.
A lender is able to handle the additional risk of the small down payment with Private Mortgage Insurance or PMI.
PMI guards the lender in the event a borrower is unable to pay on the loan and the market price of the property is lower than what is owed on the loan.
Since the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and on many occasions isn't even tax deductible, PMI can be expensive to a borrower.
It's favorable for the lender because they secure the money, and they are covered if the borrower doesn't pay, unlike a piggyback loan where the lender takes in all the damages.
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Does your monthly loan payment have a lineitem for PMI? Call GMA Appraisal Group today at (480) 998-3602 or send us an e-mail. A recent appraisal could save you thousands.
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How can a home owner refrain from bearing the cost of PMI?
The Homeowners Protection Act of 1998 makes the lenders on the majority of loans to automatically eliminate the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount.
The law states 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.
Because it can take a significant number of years to reach the point where the principal is just 80% of the original amount of the loan, it's crucial to know how your Arizona home has grown in value.
After all, every bit of appreciation you've obtained over time counts towards removing PMI. So why pay it after the balance of your loan has fallen below the 80% threshold?
Even when nationwide trends signify lower overall home values, be aware that real estate is local. Your neighborhood may not be following the national trends and/or your home may have acquired equity before things declined.
A certified, Arizona licensed real estate appraiser can help home owners figure out if their equity has made it to the 20% point, as it's a difficult thing to know.
Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job!
At GMA Appraisal Group, we know when property values have risen or declined. We're masters at recognizing value trends in Scottsdale, Maricopa County, and surrounding areas.
When faced with data from an appraiser, the mortgage company will usually remove the PMI with little trouble. At that time, the home owner can enjoy the savings from that point on.
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Does your monthly house payment include a fee for PMI? Call GMA Appraisal Group today at (480) 998-3602 or send us an e-mail. A current appraisal could save you thousands.
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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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