New Century Appraising can help you remove your Private Mortgage InsuranceIt's typically known that a 20% down payment is accepted when getting a mortgage. The lender's liability is usually only the remainder between the home value and the sum due on the loan, so the 20% adds a nice buffer against the costs of foreclosure, selling the home again, and typical value changes on the chance that a purchaser defaults. During the recent mortgage upturn of the last decade, it was common to see lenders commanding down payments of 10, 5 or often 0 percent. How does a lender endure the increased risk of the low down payment? The answer is Private Mortgage Insurance or PMI. PMI takes care of the lender in the event a borrower defaults on the loan and the value of the house is lower than what is owed on the loan. PMI can be pricey to a borrower in that the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and many times isn't even tax deductible. It's favorable for the lender because they secure the money, and they receive payment if the borrower doesn't pay, separate from a piggyback loan where the lender takes in all the losses. 
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How can homeowners keep from paying PMI?The Homeowners Protection Act of 1998 forces the lenders on most loans to automatically cancel the PMI when the principal balance of the loan reaches 78 percent of the original loan amount. The law guarantees that, at the request of the homeowner, the PMI must be abandoned when the principal amount equals just 80 percent. So, savvy homeowners can get off the hook a little earlier. Since it can take many years to get to the point where the principal is only 20% of the initial amount of the loan, it's necessary to know how your home has increased in value. After all, all of the appreciation you've obtained over time counts towards dismissing PMI. So why should you pay it after the balance of your loan has fallen below the 80% threshold? Your neighborhood may not be adhering to the national trends and/or your home might have gained equity before things calmed down, so even when nationwide trends forecast falling home values, you should understand that real estate is local. The difficult thing for most home owners to understand is just when their home's equity goes over the 20% point. An accredited, licensed real estate appraiser can definitely help. It is an appraiser's job to recognize the market dynamics of their area. At New Century Appraising, we know when property values have risen or declined. We're masters at analyzing value trends in Cutler Bay, Miami-Dade County and surrounding areas. Faced with information from an appraiser, the mortgage company will usually remove the PMI with little trouble. At which time, the home owner can retain the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: |