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Appraisal Experts of Michigan can help you remove your Private Mortgage Insurance
It's widely inferred that a 20% down payment is the standard when getting a mortgage.
Since the liability for the lender is usually only the remainder between the home value and the amount outstanding on the loan, the 20% adds a nice buffer against the charges of foreclosure, selling the home again, and typical value changes on the chance that a borrower defaults.
During the recent mortgage upturn that our country recently experienced, it was customary to see lenders only asking for down payments of 10, 5, 3 or even 0 percent.
A lender is able to endure the added risk of the reduced down payment with Private Mortgage Insurance or PMI.
PMI protects the lender if a borrower defaults on the loan and the value of the home is less than what is owed on the loan.
PMI is pricey to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage monthly payment and frequently isn't even tax deductible.
Unlike a piggyback loan where the lender takes in all the losses, PMI is beneficial for the lender because they obtain the money, and they are covered if the borrower is unable to pay.
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Is PMI a lineitem in your monthly mortgage payment? Call Appraisal Experts of Michigan today at 313-582-3400 or send us an e-mail. A current appraisal could save you thousands.
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How can homeowners refrain from bearing the cost of PMI?
With the implementation of The Homeowners Protection Act of 1998, lenders are required to automatically cease the PMI when the principal balance of the loan equals 78 percent of the original loan amount on nearly all loans.
The law guarantees that, at the request of the home owner, the PMI must be abandoned when the principal amount reaches only 80 percent. So, smart home owners can get off the hook a little earlier.
Since it can take a significant number of years to arrive at the point where the principal is just 80% of the original amount of the loan, it's necessary to know how your Michigan home has increased in value.
After all, all of the appreciation you've acquired over time counts towards removing PMI. So why pay it after your loan balance has fallen below the 80% threshold?
Your neighborhood might not adhere to national trends and/or your home could have gained equity before the economy cooled off. So even when nationwide trends forecast declining home values, you should know most importantly that real estate is local.
The difficult thing for many homeowners to determine is whether their home equity has exceeded the 20% point. A certified, Michigan licensed real estate appraiser can definitely help.
As appraisers, it's our job to know the market dynamics of our area.
At Appraisal Experts of Michigan, we're masters at pinpointing value trends in Dearborn Heights, Wayne County, and surrounding areas, and we know when property values have risen or declined.
Faced with data from an appraiser, the mortgage company will often do away with the PMI with little effort. At which time, the homeowner can delight in the savings from that point on.
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Did you have less than 20% to put down on your mortgage? Contact Appraisal Experts of Michigan today at 313-582-3400 to see if you can save money by removing your Private Mortgage Insurance payment.
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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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