Josh Anderson Appraisals, INC. can help you remove your Private Mortgage InsuranceA 20% down payment is usually accepted when purchasing a home. The lender's risk is often only the remainder between the home value and the sum remaining on the loan, so the 20% supplies a nice cushion against the costs of foreclosure, reselling the home, and typical value fluctuations in the event a purchaser defaults.The market was working with down payments as low as 10, 5 and often 0 percent during the mortgage boom of the last decade. A lender is able to manage the added risk of the reduced down payment with Private Mortgage Insurance or PMI. This supplemental policy takes care of the lender if a borrower is unable to pay on the loan and the value of the property is lower than what is owed on the loan. PMI can be costly to a borrower in 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. It's favorable for the lender because they obtain the money, and they receive payment if the borrower doesn't pay, unlike a piggyback loan where the lender absorbs all the damages.
How buyers can keep from bearing the expense of PMIWith the passage of The Homeowners Protection Act of 1998, lenders are required to automatically terminate the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount on most loans. The law promises that, at the request of the home owner, the PMI must be released when the principal amount equals just 80 percent. So, wise homeowners can get off the hook a little early.Since it can take a significant number of years to get to the point where the principal is just 80% of the original amount of the loan, it's essential to know how your Louisiana home has appreciated in value. After all, all of the appreciation you've achieved over the years counts towards abolishing PMI. So why should you pay it after your loan balance has dropped below the 80% threshold? Even when nationwide trends signify falling home values, realize that real estate is local. Your neighborhood might not be reflecting the national trends and/or your home could have gained equity before things declined. A certified, Louisiana licensed real estate appraiser can help homeowners figure out if their equity has exceeed the 20% point, as it's a difficult thing to know. It is an appraiser's job to know the market dynamics of their area. At Josh Anderson Appraisals, INC., we're experts at analyzing value trends in Lake Charles, Calcasieu 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 usually remove the PMI with little trouble. At which time, the homeowner can relish 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
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