Have equity in your home? Want a lower payment? An appraisal from Williams Appraisal Service can help you get rid of your PMI.A 20% down payment is typically accepted when buying a house. The lender's risk is generally only the remainder between the home value and the balance due on the loan, so the 20% supplies a nice cushion against the charges of foreclosure, selling the home again, and regular value changes in the event a borrower doesn't pay.During the recent mortgage upturn of the last decade, it became customary to see lenders reducing down payments to 10, 5 or often 0 percent. A lender is able to endure the increased risk of the reduced down payment with Private Mortgage Insurance or PMI. PMI protects the lender in the event a borrower is unable to pay on the loan and the value of the property is less than what is owed on the loan. PMI can be pricey to a borrower because the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and many times isn't even tax deductible. It's lucrative for the lender because they collect the money, and they are covered if the borrower is unable to pay, different from a piggyback loan where the lender takes in all the losses.
How can a homebuyer avoid paying PMI?The Homeowners Protection Act of 1998 forces the lenders on most loans to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount. The law pledges that, at the request of the homeowner, the PMI must be abandoned when the principal amount reaches only 80 percent. So, keen home owners can get off the hook sooner than expected.Considering it can take many years to get to the point where the principal is only 80% of the original amount of the loan, it's important to know how your Georgia home has appreciated in value. After all, any appreciation you've obtained over the years counts towards dismissing PMI. So what's the reason for paying it after the balance of your loan has dropped below the 80% mark? Even when nationwide trends predict declining home values, be aware that real estate is local. Your neighborhood may not be following the national trends and/or your home could have secured equity before things simmered down. An accredited, Georgia licensed real estate appraiser can help home owners figure out just when their home's equity goes over the 20% point, as it's a tough thing to know. It's an appraiser's job to keep up with the market dynamics of their area. At Williams Appraisal Service, we know when property values have risen or declined. We're experts at analyzing value trends in Rockmart, Polk County, and surrounding areas. Faced with information from an appraiser, the mortgage company will often drop the PMI with little trouble. 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: Cancellation of Private Mortgage Insurance: Federal Law May Save You Hundreds of Dollars Each Year
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