Have equity in your home? Want a lower payment? An appraisal from R.M. Conrad & Associates, Inc. can help you get rid of your PMI.It's generally inferred that a 20% down payment is the standard when getting a mortgage. The lender's liability is generally only the difference between the home value and the sum remaining on the loan, so the 20% adds a nice buffer against the charges of foreclosure, selling the home again, and typical 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 requiring down payments of 10, 5 or sometimes 0 percent. How does a lender handle the additional risk of the low down payment? The answer is Private Mortgage Insurance or PMI. PMI covers the lender in case a borrower doesn't pay on the loan and the market price of the property is less than the loan balance. Because the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and often isn't even tax deductible, PMI can be costly to a borrower. Opposite from a piggyback loan where the lender takes in all the damages, PMI is lucrative for the lender because they acquire the money, and they get the money if the borrower defaults. 
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How can homebuyers keep from paying PMI?The Homeowners Protection Act of 1998 makes the lenders on nearly all loans to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the primary loan amount. The law stipulates that, at the request of the homeowner, the PMI must be abandoned when the principal amount equals only 80 percent. So, smart homeowners can get off the hook sooner than expected. It can take many years to reach the point where the principal is only 20% of the original amount of the loan, so it's necessary to know how your home has appreciated in value. After all, all of the appreciation you've achieved over the years counts towards abolishing PMI. So why pay it after the balance of your loan has fallen below the 80% threshold? Despite the fact that nationwide trends hint at decreasing home values, understand that real estate is local. Your neighborhood might not be minding the national trends and/or your home may have secured equity before things settled down. An accredited, licensed real estate appraiser can help home owners understand just when their home's equity goes over the 20% point, as it's a tough thing to know. As appraisers, it's our job to understand the market dynamics of our area. At R.M. Conrad & Associates, Inc., we're masters at analyzing value trends in West Chester, Chester 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 remove the PMI with little trouble. At that time, the homeowner can retain the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: |