Have equity in your home? Want a lower payment? An appraisal from Browne Real Estate Ventures can help you get rid of your PMI.When purchasing a home, a 20% down payment is usually the standard. Since the risk for the lender is oftentimes only the difference between the home value and the sum remaining on the loan, the 20% provides a nice cushion against the charges of foreclosure, selling the home again, and regular value variations on the chance that a purchaser defaults.During the recent mortgage upturn of the mid 2000s, it became common to see lenders making deals with down payments of 10, 5, 3 or even 0 percent. A lender is able to manage the additional risk of the minimal down payment with Private Mortgage Insurance or PMI. PMI covers the lender if a borrower defaults on the loan and the market price of the property is lower than the balance of the loan. PMI can be expensive to a borrower in that the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and on many occasions isn't even tax deductible. It's money-making for the lender because they collect the money, and they receive payment if the borrower is unable to pay, separate from a piggyback loan where the lender absorbs all the costs.
How homebuyers can avoid paying PMIAs a result of The Homeowners Protection Act of 1998, lenders are required to automatically stop the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount on most loans. Smart home owners can get off the hook a little earlier. The law designates that, upon request of the home owner, the PMI must be released when the principal amount equals just 80 percent.Since it can take many years to arrive at the point where the principal is just 80% of the initial amount of the loan, it's essential to know how your Maryland home has increased in value. After all, all of the appreciation you've gained over the years counts towards abolishing PMI. So why pay it after your loan balance has dropped below the 80% threshold? Your neighborhood might not adhere to national trends and/or your home may have secured equity before things declined. So even when nationwide trends forecast declining home values, you should know most importantly that real estate is local. An accredited, Maryland licensed real estate appraiser can help home owners figure out just when their home's equity rises above the 20% point, as it's a tough thing to know. As appraisers, it's our job to recognize the market dynamics of our area. At Browne Real Estate Ventures, we know when property values have risen or declined. We're experts at pinpointing value trends in Crofton, Anne Arundel County, and surrounding areas. Faced with information from an appraiser, the mortgage company will often drop the PMI with little anxiety. At which time, the home owner can enjoy 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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