Have equity in your home? Want a lower payment? An appraisal from Skip Ogle and Associates can help you get rid of your PMI.When getting a mortgage, 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 sum remaining on the loan, the 20% supplies a nice cushion against the charges of foreclosure, selling the home again, and typical value variations on the chance that a purchaser defaults.During the recent mortgage upturn of the mid 2000s, it was customary to see lenders only asking for down payments of 10, 5 or often 0 percent. A lender is able to endure the additional risk of the reduced down payment with Private Mortgage Insurance or PMI. This supplemental policy protects the lender in case a borrower is unable to pay on the loan and the market price of the property is less than what is owed on the loan. PMI is pricey to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and often isn't even tax deductible. It's money-making for the lender because they obtain the money, and they receive payment if the borrower is unable to pay, unlike a piggyback loan where the lender takes in all the damages.
How home owners can refrain from paying PMIThe Homeowners Protection Act of 1998 obligates the lenders on nearly all loans to automatically terminate 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 beforehand. The law states that, at the request of the homeowner, the PMI must be released when the principal amount equals just 80 percent.Because it can take a significant number of years to reach the point where the principal is only 80% of the original loan amount, it's necessary to know how your California home has grown in value. After all, any appreciation you've gained over time counts towards dismissing PMI. So what's the reason for paying it after your loan balance has dropped below the 80% mark? Even when nationwide trends predict decreasing home values, be aware that real estate is local. Your neighborhood might not be adopting the national trends and/or your home could have acquired equity before things simmered down. The hardest thing for many homeowners to determine is whether their home equity has exceeded the 20% point. An accredited, California licensed real estate appraiser can surely help. It is an appraiser's job to recognize the market dynamics of their area. At Skip Ogle and Associates, we know when property values have risen or declined. We're experts at determining value trends in Bakersfield, Kern County, and surrounding areas. Faced with figures from an appraiser, the mortgage company will most often drop the PMI with little anxiety. At that time, the home owner can enjoy the savings from that point on.
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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