Robert Ensminger Appraisers & Ensminger Auctioneers can help you remove your Private Mortgage Insurance
A 20% down payment is typically the standard when buying a house. The lender's liability is generally only the remainder between the home value and the amount outstanding on the loan, so the 20% supplies a nice buffer against the charges of foreclosure, selling the home again, and regular value variations in the event a borrower doesn't pay.
Lenders were accepting down payments discounted to 10, 5 and often 0 percent during the mortgage boom of the mid 2000s. How does a lender handle the increased risk of the small down payment? The answer is Private Mortgage Insurance or PMI. This added policy takes care of the lender if a borrower is unable to pay on the loan and the worth of the house is less than what is owed on the loan.
PMI can be costly to a borrower because the $40-$50 a month per $100,000 borrowed is bundled 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 get the money if the borrower defaults, different from a piggyback loan where the lender consumes all the damages.
Has your home value appreciated since you first purchased? Contact Robert Ensminger Appraisers & Ensminger Auctioneers today at 717-652-4111 to see if you can cancel your Private Mortgage Insurance payment.
How can homeowners keep from paying PMI?
The Homeowners Protection Act of 1998 forces the lenders on the majority of loans to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the original loan amount. Acute home owners can get off the hook a little early. The law stipulates that, upon request of the homeowner, the PMI must be abandoned when the principal amount equals just 80 percent.
Considering it can take many years to reach the point where the principal is just 20% of the initial amount of the loan, it's crucial to know how your home has increased in value. After all, every bit of appreciation you've achieved over the years counts towards dismissing PMI. So why should you pay it after your loan balance has fallen below the 80% mark? Even when nationwide trends predict lower overall home values, be aware that real estate is local. Your neighborhood may not be following the national trends and/or your home might have gained equity before things declined.
The hardest thing for most homeowners to know is just when their home's equity rises above if their home equity has exceeded the 20% point. An accredited, licensed real estate appraiser can definitely help. It is an appraiser's job to keep up with the market dynamics of their area. At Robert Ensminger Appraisers & Ensminger Auctioneers, we know when property values have risen or declined. We're experts at recognizing value trends in Harrisburg, Dauphin County, and surrounding areas. Faced with information from an appraiser, the mortgage company will often cancel the PMI with little trouble. At which time, the home owner can relish the savings from that point on.
Has your home value appreciated since you first purchased? Call Robert Ensminger Appraisers & Ensminger Auctioneers today at 717-652-4111. You may be able to save money by removing your Private Mortgage Insurance premium.
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