Have equity in your home? Want a lower payment? An appraisal from Southern Star Real Estate Services can help you get rid of your PMI.When getting a mortgage, a 20% down payment is typically the standard. The lender's liability is usually only the difference between the home value and the amount outstanding on the loan, so the 20% provides a nice buffer against the costs of foreclosure, reselling the home, and natural value variations in the event a borrower doesn't pay. The market was working with down payments down to 10, 5 and even 0 percent in the peak of last decade's mortgage boom. How does a lender endure the increased risk of the small down payment? The answer is Private Mortgage Insurance or PMI. PMI covers the lender if a borrower defaults on the loan and the value of the house is lower than the balance of the loan. Because the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and oftentimes isn't even tax deductible, PMI is costly to a borrower. Unlike a piggyback loan where the lender absorbs all the damages, PMI is favorable for the lender because they obtain the money, and they get paid if the borrower defaults. 
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How can a home owner refrain from paying PMI?The Homeowners Protection Act of 1998 obligates the lenders on most loans to automatically stop the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount. Savvy home owners can get off the hook a little earlier. The law promises that, at the request of the home owner, the PMI must be dropped when the principal amount equals only 80 percent. It can take countless years to reach the point where the principal is just 20% of the initial amount borrowed, so it's important to know how your home has appreciated in value. After all, every bit of appreciation you've acquired over time counts towards dismissing PMI. So why pay it after the balance of your loan has fallen below the 80% mark? Your neighborhood may not be reflecting the national trends and/or your home could have acquired equity before things calmed down, so even when nationwide trends signify falling home values, you should realize that real estate is local. An accredited, 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. As appraisers, it's our job to recognize the market dynamics of our area. At Southern Star Real Estate Services, we know when property values have risen or declined. We're experts at identifying value trends in Powder Springs, Paulding County and surrounding areas. When faced with data from an appraiser, the mortgage company will often eliminate the PMI with little effort. At which time, the home owner can delight in the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: |