Have equity in your home? Want a lower payment? An appraisal from Linda McComas can help you get rid of your PMI.It's generally known that a 20% down payment is common when purchasing a home. The lender's risk is usually only the difference between the home value and the sum due on the loan, so the 20% adds a nice cushion against the costs of foreclosure, selling the home again, and regular value variations on the chance that a borrower is unable to pay. During the recent mortgage boom of the mid 2000s, it became common to see lenders taking down payments of 10, 5 or often 0 percent. A lender is able to handle the increased risk of the minimal down payment with Private Mortgage Insurance or PMI. PMI guards the lender if a borrower doesn't pay on the loan and the value of the home is less than what the borrower still owes on the loan. PMI can be costly to a borrower because the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and often isn't even tax deductible. It's advantageous for the lender because they secure the money, and they get the money if the borrower is unable to pay, unlike a piggyback loan where the lender takes in all the costs. 
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How home owners can refrain from bearing the cost of PMIWith the employment of The Homeowners Protection Act of 1998, on most loans lenders are obligated to automatically terminate the PMI when the principal balance of the loan equals 78 percent of the initial loan amount. The law designates that, upon request of the homeowner, the PMI must be abandoned when the principal amount reaches only 80 percent. So, keen home owners can get off the hook a little earlier. Considering it can take many years to get to the point where the principal is just 20% of the initial loan amount, it's important to know how your home has appreciated in value. After all, every bit of appreciation you've acquired over the years counts towards removing PMI. So what's the reason for paying it after your loan balance has fallen below the 80% mark? Your neighborhood might not be adopting the national trends and/or your home could have gained equity before things cooled off, so even when nationwide trends forecast plummeting home values, you should realize that real estate is local. The hardest thing for many homeowners to understand is just when their home's equity rises above the 20% point. A certified, licensed real estate appraiser can certainly help. As appraisers, it's our job to recognize the market dynamics of our area. At Linda McComas, we know when property values have risen or declined. We're experts at recognizing value trends in Missoula, Missoula County and surrounding areas. When faced with data from an appraiser, the mortgage company will usually drop the PMI with little anxiety. At that time, the homeowner can enjoy the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: |