Let The August Group Inc. help you decide if you can get rid of your PMIWhen purchasing a home, a 20% down payment is usually the standard. Considering the liability for the lender is generally only the difference between the home value and the sum due on the loan, the 20% adds a nice buffer against the expenses of foreclosure, reselling the home, and natural value fluctuationson the chance that a purchaser is unable to pay. Lenders were accepting down payments down 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 small 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 home is less 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. Opposite from a piggyback loan where the lender consumes all the deficits, PMI is lucrative for the lender because they collect the money, and they get the money if the borrower is unable to pay. 
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How can a home buyer avoid paying PMI?With the utilization of The Homeowners Protection Act of 1998, on most loans lenders are forced to automatically cancel the PMI when the principal balance of the loan reaches 78 percent of the original loan amount. Wise home owners can get off the hook ahead of time. The law promises that, upon request of the home owner, the PMI must be released when the principal amount reaches just 80 percent. It can take countless years to arrive at the point where the principal is only 20% of the initial amount borrowed, so it's important to know how your home has appreciated in value. After all, any appreciation you've accomplished 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% mark? Despite the fact that nationwide trends forecast decreasing home values, understand that real estate is local. Your neighborhood may not be reflecting the national trends and/or your home may have gained equity before things calmed down. 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 tough thing to know. As appraisers, it's our job to keep up with the market dynamics of our area. At The August Group Inc., we're experts at pinpointing value trends in St Louis, Saint Louis County and surrounding areas, and we know when property values have risen or declined. Faced with information from an appraiser, the mortgage company will most often remove the PMI with little effort. At that 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: |