BK Appraisal Services can help you remove your Private Mortgage InsuranceIt's largely inferred that a 20% down payment is accepted when getting a mortgage. The lender's risk is often only the difference between the home value and the sum outstanding on the loan, so the 20% adds a nice buffer against the costs of foreclosure, reselling the home, and regular value fluctuations in the event a purchaser doesn't pay. The market was accepting down payments as low as 10, 5 and even 0 percent in the peak of last decade's mortgage boom. A lender is able to manage the additional risk of the low down payment with Private Mortgage Insurance or PMI. This added policy takes care of the lender if a borrower defaults on the loan and the market price of the house is lower than what is owed on the loan. PMI is costly to a borrower because the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and many times isn't even tax deductible. It's lucrative for the lender because they collect the money, and they get the money if the borrower doesn't pay, unlike a piggyback loan where the lender consumes all the losses. ![]() Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How home owners can refrain from bearing the cost of PMIThe Homeowners Protection Act of 1998 forces the lenders on most loans to automatically terminate the PMI when the principal balance of the loan equals 78 percent of the original loan amount. The law states that, at the request of the homeowner, the PMI must be dropped when the principal amount equals only 80 percent. So, wise homeowners can get off the hook ahead of time. It can take countless years to get to the point where the principal is just 20% of the original amount borrowed, so it's necessary to know how your home has increased in value. After all, every bit of appreciation you've acquired over the years counts towards removing PMI. So why should you pay it after your loan balance has fallen below the 80% threshold? Your neighborhood might not be adopting the national trends and/or your home may have gained equity before things calmed down, so even when nationwide trends hint at declining home values, you should realize that real estate is local. An accredited, licensed real estate appraiser can help homeowners understand just when their home's equity rises above the 20% point, as it's a tough thing to know. It's an appraiser's job to keep up with the market dynamics of their area. At BK Appraisal Services, we're experts at analyzing value trends in Virginia Beach, Virginia Beach City County and surrounding areas, and we know when property values have risen or declined. Faced with figures from an appraiser, the mortgage company will often drop the PMI with little effort. At which time, the homeowner can relish the savings from that point on.
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Paying PMI?
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