Appraise Ohio, LLC can help you remove your Private Mortgage InsuranceA 20% down payment is usually the standard when getting a mortgage. Because the risk for the lender is often only the difference between the home value and the sum due on the loan, the 20% adds a nice cushion against the charges of foreclosure, reselling the home, and typical value changes on the chance that a borrower is unable to pay.
During the recent mortgage upturn that our country recently experienced, it became widespread to see lenders making deals with down payments of 10, 5, 3 or often 0 percent. A lender is able to endure the increased risk of the low down payment with Private Mortgage Insurance or PMI. This supplementary plan covers the lender in case a borrower doesn't pay on the loan and the market price of the house is lower than the balance of the loan.
PMI is pricey to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage monthly payment and many times isn't even tax deductible. Unlike a piggyback loan where the lender consumes all the deficits, PMI is beneficial for the lender because they acquire the money, and they get paid if the borrower doesn't pay.
How home buyers can avoid paying PMIWith the passage of The Homeowners Protection Act of 1998, lenders are forced to automatically eliminate the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount on most loans. Acute home owners can get off the hook a little early. The law guarantees that, at the request of the homeowner, the PMI must be released when the principal amount equals only 80 percent.
Because it can take a significant number of years to reach the point where the principal is just 80% of the original loan amount, it's important to know how your Ohio home has grown in value. After all, any appreciation you've obtained over time counts towards removing PMI. So why pay it after your loan balance has fallen below the 80% mark? Your neighborhood might not follow national trends and/or your home might have secured equity before the economy cooled off. So even when nationwide trends indicate declining home values, you should understand that real estate is local.
The hardest thing for most people to determine is whether their home equity has exceeded the 20% point. A certified, Ohio licensed real estate appraiser can definitely help. As appraisers, it's our job to know the market dynamics of our area. At Appraise Ohio, LLC, we're experts at determining value trends in Pataskala, Licking County, and surrounding areas, and we know when property values have risen or declined. When faced with information from an appraiser, the mortgage company will most often eliminate the PMI with little effort. At that time, the homeowner can delight in the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: