Acute Dimensions, LLC can help you remove your Private Mortgage InsuranceWhen getting a mortgage, a 20% down payment is usually the standard. Because the risk for the lender is generally only the remainder between the home value and the sum remaining on the loan, the 20% adds a nice buffer against the costs of foreclosure, reselling the home, and natural value changeson the chance that a borrower defaults. During the recent mortgage upturn of the mid 2000s, it was common to see lenders taking down payments of 10, 5 or sometimes 0 percent. How does a lender endure the additional risk of the small down payment? The solution is Private Mortgage Insurance or PMI. This additional policy covers the lender in the event a borrower defaults on the loan and the worth of the property is lower than the loan balance. Because the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and generally isn't even tax deductible, PMI can be costly to a borrower. Contradictory to a piggyback loan where the lender takes in all the losses, PMI is beneficial for the lender because they obtain 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 can homebuyers prevent paying PMI?With the utilization of The Homeowners Protection Act of 1998, on most loans lenders are forced to automatically cease the PMI when the principal balance of the loan equals 78 percent of the original loan amount. The law stipulates that, at the request of the home owner, the PMI must be abandoned when the principal amount equals only 80 percent. So, wise homeowners can get off the hook sooner than expected. It can take many years to reach the point where the principal is just 20% of the original amount of the loan, so it's essential to know how your home has appreciated in value. After all, all of the appreciation you've acquired over time counts towards removing PMI. So what's the reason for paying it after your loan balance has dropped below the 80% mark? Your neighborhood may not be reflecting the national trends and/or your home may have secured equity before things cooled off, so even when nationwide trends signify declining home values, you should understand that real estate is local. The difficult thing for almost all home owners to understand is just when their home's equity rises above the 20% point. An accredited, licensed real estate appraiser can surely help. As appraisers, it's our job to recognize the market dynamics of our area. At Acute Dimensions, LLC, we're masters at recognizing value trends in Chandler, Maricopa 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 anxiety. At that 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: |