Chuck Roberts & Associates can help you remove your Private Mortgage InsuranceIt's widely inferred that a 20% down payment is the standard when buying a house. The lender's liability is usually only the difference between the home value and the amount due on the loan, so the 20% adds a nice cushion against the costs of foreclosure, reselling the home, and typical value changes in the event a purchaser doesn't pay. During the recent mortgage boom of the last decade, it was common to see lenders commanding down payments of 10, 5 or even 0 percent. A lender is able to handle the additional risk of the reduced down payment with Private Mortgage Insurance or PMI. PMI takes care of the lender in the event a borrower defaults on the loan and the value of the property is lower than what is owed on the loan. Since the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and oftentimes isn't even tax deductible, PMI is pricey to a borrower. Contradictory to a piggyback loan where the lender consumes all the costs, PMI is advantageous for the lender because they secure the money, and they receive payment if the borrower doesn't pay. Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How can buyers keep from bearing the expense of PMI?The Homeowners Protection Act of 1998 forces the lenders on most loans to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the primary loan amount. Keen home owners can get off the hook a little earlier. The law promises that, at the request of the homeowner, the PMI must be released when the principal amount reaches only 80 percent. Since it can take many years to arrive at the point where the principal is just 20% of the original amount borrowed, it's essential to know how your home has increased in value. After all, any appreciation you've acquired over time counts towards removing PMI. So what's the reason for paying it after the balance of your loan has dropped below the 80% mark? Your neighborhood may not be reflecting the national trends and/or your home might have secured equity before things cooled off, so even when nationwide trends predict plunging home values, you should understand that real estate is local. A certified, licensed real estate appraiser can help homeowners understand just when their home's equity rises above the 20% point, as it's a difficult thing to know. It's an appraiser's job to recognize the market dynamics of their area. At Chuck Roberts & Associates, we know when property values have risen or declined. We're masters at recognizing value trends in Thousand Oaks, Ventura County and surrounding areas. Faced with information from an appraiser, the mortgage company will often eliminate the PMI with little trouble. At that time, the home owner can delight in the savings from that point on.
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