Cooney Appraisal Services can help you remove your Private Mortgage InsuranceWhen getting a mortgage, a 20% down payment is typically the standard. The lender's only liability is usually just the remainder between the home value and the amount due on the loan, so the 20% supplies a nice buffer against the expenses of foreclosure, reselling the home, and typical value fluctuations on the chance that a purchaser is unable to pay.During the recent mortgage boom of the mid 2000s, it became common to see lenders reducing down payments to 10, 5 or even 0 percent. How does a lender endure the additional risk of the low down payment? The answer is Private Mortgage Insurance or PMI. PMI covers the lender if a borrower doesn't pay on the loan and the value of the property is less than the balance of the loan. PMI can be costly to a borrower in that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and frequently isn't even tax deductible. It's profitable for the lender because they collect the money, and they get the money if the borrower defaults, as opposed to a piggyback loan where the lender consumes all the damages.
How can home owners keep from bearing the cost of PMI?The Homeowners Protection Act of 1998 makes the lenders on the majority of loans to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the primary loan amount. Keen home owners can get off the hook sooner than expected. The law stipulates that, upon request of the home owner, the PMI must be abandoned when the principal amount reaches just 80 percent.It can take a significant number of years to reach the point where the principal is only 80% of the original amount borrowed, so it's necessary to know how your Ohio home has appreciated in value. After all, every bit of appreciation you've achieved over the years counts towards dismissing PMI. So what's the reason for paying it after your loan balance has dropped below the 80% mark? Your neighborhood might not adhere to national trends and/or your home may have gained equity before things cooled off. So even when nationwide trends hint at decreasing home values, you should realize that real estate is local. The difficult thing for most consumers to determine is whether their home equity has exceeded the 20% point. An accredited, Ohio licensed real estate appraiser can certainly help. Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job! At Cooney Appraisal Services, we know when property values have risen or declined. We're masters at analyzing value trends in Fairview Park, Cuyahoga County, and surrounding areas. Faced with data from an appraiser, the mortgage company will most often cancel the PMI with little effort. At which 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: Cancellation of Private Mortgage Insurance: Federal Law May Save You Hundreds of Dollars Each Year
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