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Let Abacus Appraisal, Inc. help you discover if you can get rid of your PMI
It's largely inferred that a 20% down payment is accepted when buying a house.
The lender's liability is often only the remainder between the home value and the amount outstanding on the loan, so the 20% supplies a nice buffer against the expenses of foreclosure, selling the home again, and natural value variations in the event a purchaser doesn't pay.
During the recent mortgage boom of the last decade, it became customary to see lenders making deals with down payments of 10, 5, 3 or often 0 percent.
A lender is able to manage the added risk of the small down payment with Private Mortgage Insurance or PMI.
This supplemental plan guards the lender if a borrower doesn't pay on the loan and the value of the property is less than the balance of the loan.
PMI can be costly to a borrower in that the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and on many occasions isn't even tax deductible.
Separate from a piggyback loan where the lender absorbs all the costs, PMI is favorable for the lender because they acquire the money, and they get paid if the borrower is unable to pay.
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Is PMI a part of your monthly house payment? Call Abacus Appraisal, Inc. today at (850) 377-5331 or send us an e-mail. A recent appraisal could save you thousands.
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How can a homeowner prevent bearing the cost of PMI?
With the implementation of The Homeowners Protection Act of 1998, lenders are forced to automatically terminate the PMI when the principal balance of the loan reaches 78 percent of the primary loan amount on nearly all loans.
The law stipulates that, at the request of the homeowner, the PMI must be released when the principal amount equals just 80 percent. So, savvy homeowners can get off the hook sooner than expected.
Considering it can take a significant number of years to get to the point where the principal is only 80% of the original amount of the loan, it's necessary to know how your Florida home has increased in value.
After all, all of the appreciation you've acquired over time counts towards abolishing PMI. So why pay it after your loan balance has dropped below the 80% mark?
Your neighborhood might not follow national trends and/or your home may have gained equity before things simmered down. So even when nationwide trends forecast decreasing home values, you should know most importantly that real estate is local.
The difficult thing for almost all homeowners to figure out is whether their home equity has exceeded the 20% point. An accredited, Florida licensed real estate appraiser can surely help.
As appraisers, it's our job to know the market dynamics of our area.
At Abacus Appraisal, Inc. , we're masters at analyzing value trends in Pensacola, Escambia County, and surrounding areas, and we know when property values have risen or declined.
When faced with data from an appraiser, the mortgage company will generally cancel the PMI with little effort. At that time, the home owner can relish the savings from that point on.
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The amount you keep from dropping your PMI pays for the appraisal in no time. Abacus Appraisal, Inc. are experts when it comes to real estate value trends in Pensacola and Escambia County. Contact us today.
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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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