Let Robert Ensminger Appraisers & Ensminger Auctioneers help you determine if you can eliminate your PMI
When purchasing a home, a 20% down payment is usually the standard. Because the risk for the lender is generally only the difference between the home value and the amount outstanding on the loan, the 20% provides a nice cushion against the expenses of foreclosure, reselling the home, and regular value variations in the event a purchaser doesn't pay.
During the recent mortgage upturn of the last decade, it became common to see lenders reducing down payments to 10, 5, 3 or often 0 percent. A lender is able to manage the additional risk of the reduced down payment with Private Mortgage Insurance or PMI. This supplementary plan protects the lender in the event a borrower is unable to pay on the loan and the value of the property is lower than what the borrower still owes on the loan.
PMI can be pricey to a borrower in that the $40-$50 a month per $100,000 borrowed is rolled into the mortgage payment and frequently isn't even tax deductible. Unlike a piggyback loan where the lender consumes all the costs, PMI is profitable for the lender because they obtain the money, and they are covered if the borrower defaults.
The savings from getting rid of your PMI will make up for the price of the appraisal in no time. Nobody is more qualified than Robert Ensminger Appraisers & Ensminger Auctioneers when it comes to appreciating values in the city of Harrisburg and Dauphin County. Contact us today.
How can a homebuyer prevent bearing the expense of PMI?
The Homeowners Protection Act of 1998 forces the lenders on the majority of loans to automatically stop the PMI when the principal balance of the loan equals 78 percent of the primary loan amount. Wise home owners can get off the hook sooner than expected. The law promises that, at the request of the homeowner, the PMI must be abandoned when the principal amount equals only 80 percent.
Because it can take a significant number of years to arrive at the point where the principal is just 80% of the original loan amount, it's essential to know how your Pennsylvania home has grown in value. After all, any appreciation you've accomplished over time counts towards abolishing PMI. So why should you pay it after the balance of your loan has dropped below the 80% mark? Your neighborhood might not follow national trends and/or your home might have acquired equity before things cooled off. So even when nationwide trends predict falling home values, you should know most importantly that real estate is local.
The difficult thing for almost all homeowners to determine is whether their home equity has exceeded the 20% point. An accredited, Pennsylvania licensed real estate appraiser can surely help. It's an appraiser's job to understand 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 data from an appraiser, the mortgage company will generally remove the PMI with little effort. At that time, the home owner can enjoy the savings from that point on.
Does your monthly mortgage payment include a fee for PMI? Call Robert Ensminger Appraisers & Ensminger Auctioneers today at 717-652-4111 or send us an e-mail. A new appraisal could save you thousands.
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