Have equity in your home? Want a lower payment? An appraisal from Troyer Appraisal Solutions, LLC. can help you get rid of your PMI.A 20% down payment is typically the standard when buying a house. The lender's risk is usually only the remainder between the home value and the balance remaining on the loan, so the 20% supplies a nice cushion against the costs of foreclosure, selling the home again, and natural value variations on the chance that a borrower defaults.
During the recent mortgage boom of the mid 2000s, it became common to see lenders only asking for down payments of 10, 5 or even 0 percent. A lender is able to endure the additional risk of the small down payment with Private Mortgage Insurance or PMI. PMI covers the lender if a borrower doesn't pay on the loan and the market price of the house is less than the balance of the loan.
PMI can be expensive to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and on many occasions isn't even tax deductible. Different from a piggyback loan where the lender absorbs all the costs, PMI is beneficial for the lender because they collect the money, and they are covered if the borrower defaults.
How can homebuyers avoid bearing the expense of PMI?With the passage of The Homeowners Protection Act of 1998, lenders are required to automatically terminate the PMI when the principal balance of the loan reaches 78 percent of the original loan amount on nearly all loans. Wise home owners can get off the hook a little earlier. The law guarantees that, at the request of the homeowner, the PMI must be abandoned when the principal amount equals just 80 percent.
It can take a significant number of years to reach the point where the principal is just 80% of the original amount borrowed, so it's necessary to know how your South Carolina home has increased in value. After all, any appreciation you've achieved over the years counts towards dismissing PMI. So why pay it after your loan balance has dropped below the 80% mark? Even when nationwide trends indicate lower overall home values, understand that real estate is local. Your neighborhood might not be following the national trends and/or your home could have secured equity before things simmered down.
The toughest thing for many people to figure out is whether their home equity has exceeded the 20% point. An accredited, South Carolina licensed real estate appraiser can certainly help. Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job! At Troyer Appraisal Solutions, LLC., we know when property values have risen or declined. We're experts at recognizing value trends in Greenville, Greenville County, and surrounding areas. When faced with figures from an appraiser, the mortgage company will often cancel the PMI with little trouble. At that time, the home owner can relish the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: