Ingram Appraisals can help you remove your Private Mortgage InsuranceA 20% down payment is typically the standard when purchasing a home. Because the liability for the lender is often 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 variations in the event a borrower defaults.
During the recent mortgage boom that our country recently experienced, it became widespread to see lenders only asking for down payments of 10, 5 or even 0 percent. How does a lender endure the added risk of the small down payment? The answer is Private Mortgage Insurance or PMI. PMI covers the lender if a borrower defaults on the loan and the value of the property is lower than the loan balance.
PMI is pricey to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and often isn't even tax deductible. Separate from a piggyback loan where the lender takes in all the damages, PMI is money-making for the lender because they acquire the money, and they receive payment if the borrower doesn't pay.
How can a home buyer refrain from paying PMI?As a result of The Homeowners Protection Act of 1998, lenders are obligated to automatically cancel the PMI when the principal balance of the loan reaches 78 percent of the primary loan amount on most loans. Savvy homeowners can get off the hook sooner than expected. The law guarantees that, at the request of the homeowner, the PMI must be abandoned when the principal amount reaches just 80 percent.
It can take many years to get to the point where the principal is only 80% of the original amount of the loan, so it's important to know how your Oklahoma home has grown in value. After all, any appreciation you've gained over the years 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 declining home values, realize that real estate is local. Your neighborhood might not be minding the national trends and/or your home may have secured equity before things cooled off.
The hardest thing for almost all homeowners to determine is whether their home equity has exceeded the 20% point. An accredited, Oklahoma licensed real estate appraiser can definitely help. It is an appraiser's job to know the market dynamics of their area. At Ingram Appraisals, we're experts at pinpointing value trends in Holdenville, Hughes County, and surrounding areas, and we know when property values have risen or declined. When faced with information from an appraiser, the mortgage company will most often cancel the PMI with little anxiety. At that time, the home owner can relish the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: