Crowe Appraisals can help you remove your Private Mortgage InsuranceIt's typically understood that a 20% down payment is the standard when purchasing a home. Because the liability for the lender is often only the difference between the home value and the sum remaining on the loan, the 20% provides a nice buffer against the charges of foreclosure, selling the home again, and natural value variations on the chance that a purchaser is unable to pay.
The market was working with down payments discounted to 10, 5 and even 0 percent in the peak of last decade's mortgage boom. A lender is able to handle the increased risk of the low down payment with Private Mortgage Insurance or PMI. This added plan guards the lender in the event a borrower defaults on the loan and the market price of the property is less than the balance of the loan.
PMI can be costly to a borrower in that the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and frequently isn't even tax deductible. Separate from a piggyback loan where the lender takes in all the damages, PMI is advantageous for the lender because they collect the money, and they are covered if the borrower doesn't pay.
How can a home owner keep from paying PMI?The Homeowners Protection Act of 1998 obligates the lenders on the majority of loans to automatically terminate the PMI when the principal balance of the loan reaches 78 percent of the original loan amount. Acute home owners can get off the hook sooner than expected. The law designates that, at the request of the homeowner, the PMI must be dropped when the principal amount reaches just 80 percent.
Since it can take a significant number of years to reach the point where the principal is only 80% of the initial amount of the loan, it's important to know how your Oklahoma home has increased in value. After all, any appreciation you've gained over the years counts towards dismissing PMI. So why pay it after your loan balance has dropped below the 80% mark? Your neighborhood may not conform to national trends and/or your home may have acquired equity before the economy declined. So even when nationwide trends signify declining home values, you should understand that real estate is local.
A certified, Oklahoma licensed real estate appraiser can help homeowners figure out just when their home's equity goes over the 20% point, as it's a hard thing to know. As appraisers, it's our job to recognize the market dynamics of our area. At Crowe Appraisals, we know when property values have risen or declined. We're experts at determining value trends in Oklahoma City, Oklahoma County, and surrounding areas. Faced with information from an appraiser, the mortgage company will most often do away with the PMI with little anxiety. At that time, the homeowner can delight in the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: