CW alamode can help you remove your Private Mortgage InsuranceWhen getting a mortgage, a 20% down payment is usually the standard. Since the risk for the lender is often only the difference between the home value and the sum due on the loan, the 20% provides a nice cushion against the expenses of foreclosure, reselling the home, and typical value changes on the chance that a purchaser is unable to pay.During the recent mortgage upturn of the last decade, it was customary to see lenders reducing down payments to 10, 5 or sometimes 0 percent. A lender is able to endure the added risk of the minimal down payment with Private Mortgage Insurance or PMI. PMI guards the lender if a borrower doesn't pay on the loan and the market price of the property is lower than the balance of the loan. Because the $40-$50 a month per $100,000 borrowed is lumped into the mortgage monthly payment and on many occasions isn't even tax deductible, PMI can be costly to a borrower. It's profitable for the lender because they secure the money, and they are covered if the borrower defaults, unlike a piggyback loan where the lender consumes all the damages.
How can homeowners keep from bearing the expense of PMI?With the passage of The Homeowners Protection Act of 1998, lenders are forced to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount on most loans. Wise home owners can get off the hook sooner than expected. The law promises that, at the request of the home owner, the PMI must be released when the principal amount reaches just 80 percent.Considering it can take a significant number of years to arrive at the point where the principal is only 80% of the initial amount borrowed, it's essential to know how your Oklahoma home has increased in value. After all, every bit of appreciation you've obtained over time counts towards dismissing PMI. So what's the reason for paying it after your loan balance has dropped below the 80% threshold? Even when nationwide trends hint at lower overall home values, understand that real estate is local. Your neighborhood might not be reflecting the national trends and/or your home could have secured equity before things cooled off. An accredited, Oklahoma licensed real estate appraiser can help home owners figure out if their equity has exceeed the 20% point, as it's a difficult thing to know. It's an appraiser's job to keep up with the market dynamics of their area. At CW alamode, we're masters at pinpointing value trends in Oklahoma City, Oklahoma 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 generally remove 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: Cancellation of Private Mortgage Insurance: Federal Law May Save You Hundreds of Dollars Each Year
|
||||||||||||||||||
Got a Question?
Do you have a question? We can help. Simply fill out the form below and we'll contact you with the answer, with no obligation to you. We guarantee your privacy.