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Let BOB'S APPRAISAL SERVICE help you figure out if you can cancel your PMI
A 20% down payment is usually accepted when getting a mortgage.
Because the liability for the lender is often only the difference between the home value and the sum remaining on the loan, the 20% supplies a nice buffer against the costs of foreclosure, selling the home again, and regular value fluctuations on the chance that a purchaser is unable to pay.
During the recent mortgage upturn that our country recently experienced, it was customary to see lenders making deals with down payments of 10, 5, 3 or even 0 percent.
How does a lender handle the increased risk of the small down payment? The solution is Private Mortgage Insurance or PMI.
This supplementary plan covers the lender in case a borrower doesn't pay on the loan and the value of the house is lower than what is owed on the loan.
Since the $40-$50 a month per $100,000 borrowed is rolled into the mortgage payment and oftentimes isn't even tax deductible, PMI can be expensive to a borrower.
It's favorable for the lender because they secure the money, and they are covered if the borrower is unable to pay, as opposed to a piggyback loan where the lender takes in all the costs.
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The savings from getting rid of your PMI will make up for the cost of the appraisal in no time. BOB'S APPRAISAL SERVICE has years of experience with value trends in the city of Cordova and Shelby County. Contact us today.
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How can a buyer keep from paying PMI?
The Homeowners Protection Act of 1998 requires the lenders on the majority of loans to automatically cease the PMI when the principal balance of the loan equals 78 percent of the initial loan amount.
Smart homeowners can get off the hook sooner than expected. The law promises that, at the request of the homeowner, the PMI must be dropped when the principal amount reaches only 80 percent.
It can take several years to arrive at the point where the principal is just 80% of the original amount borrowed, so it's important to know how your Tennessee home has grown in value.
After all, every bit of appreciation you've acquired over the years counts towards dismissing PMI. So what's the reason for paying it after your loan balance has dropped below the 80% mark?
Your neighborhood may not adhere to national trends and/or your home may have secured equity before things declined. So even when nationwide trends predict falling home values, you should understand that real estate is local.
The difficult thing for many homeowners to determine is whether their home equity has exceeded the 20% point. A certified, Tennessee licensed real estate appraiser can certainly help.
It is an appraiser's job to keep up with the market dynamics of their area.
At BOB'S APPRAISAL SERVICE, we know when property values have risen or declined. We're masters at recognizing value trends in Cordova, Shelby County, and surrounding areas.
When faced with figures from an appraiser, the mortgage company will usually drop the PMI with little effort. At that time, the homeowner can relish the savings from that point on.
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Does your monthly loan payment include a fee for PMI? Call BOB'S APPRAISAL SERVICE today at 901-309-3747 or send us an e-mail. Documentation of your home's present value could save you thousands.
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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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