Have equity in your home? Want a lower payment? An appraisal from Maria Storti can help you get rid of your PMI.A 20% down payment is usually accepted when getting a mortgage. The lender's risk is usually only the difference between the home value and the amount remaining on the loan, so the 20% supplies a nice buffer against the charges of foreclosure, reselling the home, and regular value fluctuations in the event a borrower defaults. During the recent mortgage upturn of the last decade, it became common to see lenders requiring down payments of 10, 5 or sometimes 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 if a borrower defaults on the loan and the market price of the house is lower than the loan balance. PMI can be costly to a borrower in that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and generally isn't even tax deductible. Contradictory to a piggyback loan where the lender takes in all the costs, PMI is beneficial for the lender because they secure the money, and they get the money if the borrower doesn't pay. 
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How can homebuyers avoid bearing the cost of PMI?With the utilization of The Homeowners Protection Act of 1998, on most loans lenders are obligated to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the original loan amount. The law pledges that, upon request of the homeowner, the PMI must be abandoned when the principal amount reaches just 80 percent. So, savvy home owners can get off the hook a little early. Since it can take countless years to arrive at the point where the principal is just 20% of the initial loan amount, it's important to know how your home has grown in value. After all, any appreciation you've gained over the years counts towards removing PMI. So why pay it after the balance of your loan has fallen below the 80% mark? Even when nationwide trends indicate falling home values, realize that real estate is local. Your neighborhood may not be following the national trends and/or your home may have acquired equity before things calmed down. A certified, licensed real estate appraiser can help homeowners understand 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 recognize the market dynamics of their area. At Maria Storti, we're experts at pinpointing value trends in Orange, Orange County and surrounding areas, and we know when property values have risen or declined. When faced with figures from an appraiser, the mortgage company will often eliminate the PMI with little trouble. At which time, the homeowner can enjoy the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: |