Let Associated Appraisal Group, Inc. help you determine if you can cancel your PMI
A 20% down payment is usually the standard when purchasing a home. The lender's risk is oftentimes only the remainder between the home value and the amount remaining on the loan, so the 20% adds a nice buffer against the expenses of foreclosure, reselling the home, and regular value changes on the chance that a purchaser defaults.
The market was working with down payments as low as 10, 5 and often 0 percent in the peak of last decade's mortgage boom. A lender is able to handle the additional risk of the small down payment with Private Mortgage Insurance or PMI. This supplementary plan covers the lender in the event a borrower defaults on the loan and the value of the home is lower than the balance of the loan.
PMI can be pricey to a borrower in that the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and many times isn't even tax deductible. Different from a piggyback loan where the lender consumes all the costs, PMI is beneficial for the lender because they obtain the money, and they are covered if the borrower is unable to pay.
Did you have less than 20% to put down on your mortgage? Contact Associated Appraisal Group, Inc. today at 727-712-0555. You may be able to save money by removing your Private Mortgage Insurance payment.
How homebuyers can prevent paying PMI
The Homeowners Protection Act of 1998 makes the lenders on most loans to automatically cancel PMI when the principal balance of the loan equals 78 percent of the beginning loan amount. The law pledges that, upon 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 with PMI removal.
It can take a significant number of years to arrive at the point where the principal is just 80% of the initial amount borrowed, so it's important to know how your Florida home has increased in value. After all, every bit of appreciation you've obtained over the years counts towards abolishing PMI. So why pay it after the balance of your loan has dropped below the 80% mark? Your neighborhood might not follow national trends and/or your home may have acquired equity before things simmered down. So even when nationwide trends signify falling home values, you should know most importantly that real estate is local.
A certified, Florida licensed real estate appraiser can help homeowners figure out if their equity has made it to the 20% point, as it's a hard thing to know. It is an appraiser's job to keep up with the market dynamics of their area. At Associated Appraisal Group, Inc., we're masters at identifying value trends in Oldsmar, Pinellas County, and surrounding areas, and we know when property values have risen or declined. When faced with data from an appraiser, the mortgage company will most often eliminate the PMI with little effort. At that time, the home owner can relish the savings from that point on.
The savings from dropping the PMI required when you got your mortgage will make up for the cost of the appraisal in a matter of months. Nobody is more qualified than Associated Appraisal Group, Inc. when it comes to appreciating values in Oldsmar and Pinellas County. Contact us today.
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