Let Burkett Real Estate Group help you discover if you can cancel your PMIA 20% down payment is usually accepted when buying a house. Because the liability for the lender is generally only the remainder between the home value and the sum outstanding on the loan, the 20% provides a nice cushion against the costs of foreclosure, reselling the home, and typical value variations in the event a borrower defaults.The market was accepting down payments discounted to 10, 5 and frequently 0 percent in the peak of last decade's mortgage boom. How does a lender manage the added risk of the low down payment? The solution is Private Mortgage Insurance or PMI. This additional policy takes care of the lender if a borrower is unable to pay on the loan and the value of the home is lower than what the borrower still owes on the loan. PMI can be expensive to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and frequently isn't even tax deductible. Separate from a piggyback loan where the lender absorbs all the costs, PMI is favorable for the lender because they obtain the money, and they get the money if the borrower doesn't pay.
How can home buyers avoid bearing the cost of PMI?As a result of The Homeowners Protection Act of 1998, lenders are obligated to automatically terminate the PMI when the principal balance of the loan equals 78 percent of the primary loan amount on nearly all loans. The law pledges that, upon request of the home owner, the PMI must be released when the principal amount reaches just 80 percent. So, savvy homeowners can get off the hook a little earlier.Because it can take many years to arrive at the point where the principal is only 80% of the initial amount borrowed, it's crucial to know how your Georgia home has grown in value. After all, any appreciation you've acquired over time counts towards removing PMI. So why should you pay it after your loan balance has fallen below the 80% threshold? Even when nationwide trends hint at lower overall home values, realize that real estate is local. Your neighborhood may not be minding the national trends and/or your home might have gained equity before things declined. The hardest thing for most people to figure out is just when their home's equity goes over the 20% point. An accredited, Georgia licensed real estate appraiser can definitely help. It is an appraiser's job to understand the market dynamics of their area. At Burkett Real Estate Group, we know when property values have risen or declined. We're experts at pinpointing value trends in Augusta, Richmond County, and surrounding areas. Faced with information from an appraiser, the mortgage company will usually remove the PMI with little effort. At which time, the homeowner can relish 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
|
||||||||||||||||||
