Have equity in your home? Want a lower payment? An appraisal from JTLH Real Estate Consultants, Inc. can help you get rid of your PMI.A 20% down payment is usually accepted when getting a mortgage. The lender's only risk is typically just the difference between the home value and the amount due on the loan, so the 20% adds a nice buffer against the charges of foreclosure, selling the home again, and typical value fluctuations on the chance that a purchaser is unable to pay.Lenders were taking down payments dropping to 10, 5 and frequently 0 percent during the mortgage boom of the last decade. How does a lender manage the increased risk of the low down payment? The solution is Private Mortgage Insurance or PMI. This added policy protects the lender if a borrower defaults on the loan and the value of the property is lower than the loan balance. 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, PMI can be expensive to a borrower. Unlike a piggyback loan where the lender absorbs all the costs, PMI is money-making for the lender because they secure the money, and they get the money if the borrower defaults.
How buyers can avoid bearing the expense of PMIWith the implementation of The Homeowners Protection Act of 1998, lenders are required to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount on nearly all loans. The law guarantees that, at the request of the home owner, the PMI must be dropped when the principal amount equals only 80 percent. So, smart home owners can get off the hook ahead of time.Since it can take several years to reach the point where the principal is only 80% of the original amount of the loan, it's crucial to know how your Georgia home has appreciated in value. After all, any appreciation you've gained over the years counts towards removing PMI. So what's the reason for paying it after the balance of your loan has dropped below the 80% threshold? Your neighborhood might not conform to national trends and/or your home could have acquired equity before things simmered down. So even when nationwide trends hint at declining home values, you should know most importantly that real estate is local. The toughest thing for almost all homeowners to figure out is just when their home's equity rises above the 20% point. An accredited, Georgia licensed real estate appraiser can surely help. Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job! At JTLH Real Estate Consultants, Inc., we're masters at analyzing value trends in McDonough, Henry County, and surrounding areas, and we know when property values have risen or declined. When faced with figures from an appraiser, the mortgage company will generally drop the PMI with little trouble. At which time, the homeowner can retain 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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