Comprehensive Valuation Services, LLC can help you remove your Private Mortgage InsuranceWhen purchasing a home, a 20% down payment is typically the standard. Considering the risk for the lender is often only the difference between the home value and the sum due on the loan, the 20% adds a nice buffer against the charges of foreclosure, selling the home again, and regular value fluctuations in the event a purchaser doesn't pay.
Lenders were accepting down payments discounted to 10, 5 and often 0 percent in the peak of last decade's mortgage boom. A lender is able to manage the additional risk of the reduced down payment with Private Mortgage Insurance or PMI. This added plan protects the lender if a borrower defaults on the loan and the value of the property is lower than what the borrower still owes on the loan.
Because the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and often isn't even tax deductible, PMI is pricey to a borrower. As opposed to a piggyback loan where the lender consumes all the damages, PMI is favorable for the lender because they collect the money, and they receive payment if the borrower is unable to pay.
How home buyers can avoid bearing the expense of PMIWith the implementation of The Homeowners Protection Act of 1998, lenders are required to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the original loan amount on nearly all loans. Keen home owners can get off the hook beforehand. The law guarantees that, upon request of the home owner, the PMI must be dropped when the principal amount equals just 80 percent.
Considering it can take many years to reach the point where the principal is just 80% of the initial loan amount, it's crucial to know how your Kentucky home has appreciated in value. After all, any appreciation you've achieved 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? Your neighborhood may not conform to national trends and/or your home might have acquired equity before things cooled off. So even when nationwide trends signify a reduction in home values, you should know most importantly that real estate is local.
The hardest thing for many people to determine is whether their home equity has exceeded the 20% point. A certified, Kentucky licensed real estate appraiser can surely help. As appraisers, it's our job to keep up with the market dynamics of our area. At Comprehensive Valuation Services, LLC, we know when property values have risen or declined. We're masters at recognizing value trends in Florence, Boone County, and surrounding areas. Faced with information from an appraiser, the mortgage company will generally eliminate the PMI with little anxiety. At which time, the home owner can retain the savings from that point on.
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