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Have equity in your home? Want a lower payment? An appraisal from Walker & Associates can help you get rid of your PMI.
When getting a mortgage, a 20% down payment is typically the standard.
Because the liability for the lender is usually only the difference between the home value and the sum due on the loan, the 20% supplies a nice buffer against the charges of foreclosure, reselling the home, and regular value changes in the event a borrower is unable to pay.
During the recent mortgage boom of the mid 2000s, it became common to see lenders only asking for down payments of 10, 5 or sometimes 0 percent.
A lender is able to manage the added risk of the small down payment with Private Mortgage Insurance or PMI.
PMI protects the lender in case a borrower doesn't pay on the loan and the value of the property is lower than the balance of the loan.
PMI can be pricey to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage monthly payment and on many occasions isn't even tax deductible.
Unlike a piggyback loan where the lender consumes all the deficits, PMI is advantageous for the lender because they secure 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? Contact Walker & Associates today at (704) 366-0661. You may be able to get rid of your Private Mortgage Insurance payment.
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How home buyers can refrain from bearing the cost of PMI
As a result of The Homeowners Protection Act of 1998, lenders are required to automatically stop the PMI when the principal balance of the loan reaches 78 percent of the primary loan amount on most loans.
Acute homeowners can get off the hook a little early. The law promises that, at the request of the home owner, the PMI must be dropped when the principal amount reaches just 80 percent.
It can take several years to get to the point where the principal is only 80% of the initial amount of the loan, so it's essential to know how your North Carolina home has grown in value.
After all, every bit of appreciation you've accomplished 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% threshold?
Even when nationwide trends hint at falling home values, realize that real estate is local. Your neighborhood may not be minding the national trends and/or your home may have acquired equity before things declined.
An accredited, North Carolina licensed real estate appraiser can help home owners figure out just when their home's equity goes over the 20% point, as it's a difficult thing to know.
It's an appraiser's job to know the market dynamics of their area.
At Walker & Associates, we know when property values have risen or declined. We're experts at recognizing value trends in Charlotte, Mecklenburg County, and surrounding areas.
Faced with figures from an appraiser, the mortgage company will generally drop the PMI with little anxiety. At which time, the home owner can enjoy the savings from that point on.
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Is PMI a lineitem in your monthly mortgage payment? Call Walker & Associates today at (704) 366-0661 or send us an e-mail. Documentation of your home's current 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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