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Have equity in your home? Want a lower payment? An appraisal from Woods Appraisal, LLC can help you get rid of your PMI.
When buying a house, a 20% down payment is usually the standard.
Since the risk for the lender is generally only the difference between the home value and the amount outstanding on the loan, the 20% adds a nice cushion against the costs of foreclosure, reselling the home, and typical value variations in the event a borrower defaults.
The market was taking down payments discounted to 10, 5 and even 0 percent during the mortgage boom of the last decade.
How does a lender manage the added risk of the small down payment? The solution is Private Mortgage Insurance or PMI.
PMI protects the lender in case a borrower doesn't pay on the loan and the value of the house is lower than the loan balance.
PMI is costly 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.
Different from a piggyback loan where the lender consumes all the damages, PMI is advantageous for the lender because they acquire the money, and they receive payment if the borrower defaults.
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The savings from dropping your PMI pays for the appraisal in no time. Nobody is more qualified than Woods Appraisal, LLC when it comes to appreciating values in the city of Fort Payne and De Kalb County. Contact us today.
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How homebuyers can prevent bearing the expense of PMI
With the implementation of The Homeowners Protection Act of 1998, lenders are required to automatically cease the PMI when the principal balance of the loan equals 78 percent of the initial loan amount on nearly all loans.
Wise home owners can get off the hook beforehand. The law pledges that, at the request of the homeowner, the PMI must be abandoned when the principal amount equals just 80 percent.
Since it can take several years to reach the point where the principal is only 80% of the initial amount borrowed, it's important to know how your Alabama home has increased in value.
After all, any appreciation you've achieved over the years counts towards dismissing PMI. So what's the reason for paying it after your loan balance has fallen below the 80% threshold?
Your neighborhood might not follow national trends and/or your home could have gained equity before the economy cooled off. So even when nationwide trends indicate a reduction in home values, you should know most importantly that real estate is local.
The difficult thing for almost all people to figure out is whether their home equity has exceeded the 20% point. An accredited, Alabama licensed real estate appraiser can surely help.
It is an appraiser's job to understand the market dynamics of their area.
At Woods Appraisal, LLC, we're experts at pinpointing value trends in Fort Payne, De Kalb County, and surrounding areas, and we know when property values have risen or declined.
When faced with figures from an appraiser, the mortgage company will most often remove the PMI with little anxiety. At which time, the homeowner can retain the savings from that point on.
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Did you have less than 20% to put down on your mortgage? Call Woods Appraisal, LLC today at 2568457910. You may be able to save money by removing your Private Mortgage Insurance payment.
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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
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