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Let Appraisal Group of Tennessee, LLC help you determine if you can cancel your PMI
A 20% down payment is typically the standard when purchasing a home.
Considering the risk for the lender is often only the difference between the home value and the amount remaining on the loan, the 20% adds a nice cushion against the charges of foreclosure, reselling the home, and regular value changes on the chance that a purchaser defaults.
During the recent mortgage upturn of the last decade, it became common to see lenders making deals with down payments of 10, 5 or often 0 percent.
How does a lender endure the added risk of the small down payment? The solution is Private Mortgage Insurance or PMI.
PMI protects the lender if a borrower defaults on the loan and the market price of the house is less than what is owed on the loan.
PMI can be pricey to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and often isn't even tax deductible.
Instead of a piggyback loan where the lender consumes all the costs, PMI is profitable for the lender because they acquire the money, and they get the money if the borrower defaults.
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Did you secure your mortgage with less than 20% down? Call Appraisal Group of Tennessee, LLC today at 931.433.2059. You may be able to save money by removing your Private Mortgage Insurance premium.
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How can a buyer keep from bearing the expense of PMI?
The Homeowners Protection Act of 1998 makes the lenders on most loans to automatically terminate the PMI when the principal balance of the loan equals 78 percent of the primary loan amount.
The law guarantees that, at the request of the home owner, the PMI must be abandoned when the principal amount equals only 80 percent. So, wise homeowners can get off the hook ahead of time.
Considering it can take many years to reach the point where the principal is only 80% of the original amount of the loan, it's essential to know how your Tennessee home has increased in value.
After all, all of the appreciation you've acquired over time counts towards dismissing PMI. So what's the reason for paying it after the balance of your loan has dropped below the 80% mark?
Even when nationwide trends hint at falling home values, be aware that real estate is local. Your neighborhood might not be following the national trends and/or your home might have acquired equity before things cooled off.
The difficult thing for almost all homeowners to figure out is just when their home's equity rises above the 20% point. An accredited, Tennessee licensed real estate appraiser can surely help.
It's an appraiser's job to know the market dynamics of their area.
At Appraisal Group of Tennessee, LLC, we're experts at analyzing value trends in Fayetteville, Lincoln County, and surrounding areas, and we know when property values have risen or declined.
Faced with data from an appraiser, the mortgage company will most often cancel the PMI with little trouble. At which time, the home owner can delight in the savings from that point on.
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The amount you keep from getting rid of your PMI pays for the appraisal in no time. Nobody is more qualified than Appraisal Group of Tennessee, LLC when it comes to appreciating values in Fayetteville and Lincoln County. Contact us today.
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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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