Let Alpine Appraisal, LLC. help you determine if you can eliminate your PMIA 20% down payment is typically accepted when buying a house. The lender's risk is often only the remainder between the home value and the amount outstanding on the loan, so the 20% provides a nice buffer against the expenses of foreclosure, selling the home again, and regular value fluctuations in the event a borrower doesn't pay. During the recent mortgage upturn of the mid 2000s, it was customary to see lenders taking down payments of 10, 5 or sometimes 0 percent. How does a lender endure the added risk of the low down payment? The solution is Private Mortgage Insurance or PMI. This supplementary policy guards the lender if a borrower defaults on the loan and the worth of the house is lower than the loan balance. Since the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and generally isn't even tax deductible, PMI can be expensive to a borrower. It's beneficial for the lender because they secure the money, and they get paid if the borrower doesn't pay, unlike a piggyback loan where the lender takes in all the deficits. 
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How can a homebuyer avoid paying PMI?The Homeowners Protection Act of 1998 forces the lenders on most loans to automatically eliminate the PMI when the principal balance of the loan reaches 78 percent of the original loan amount. Keen home owners can get off the hook a little earlier. The law pledges that, upon request of the home owner, the PMI must be abandoned when the principal amount equals only 80 percent. Because it can take countless years to arrive at the point where the principal is only 20% of the initial amount of the loan, it's necessary to know how your home has appreciated in value. After all, every bit of appreciation you've accomplished over the years counts towards dismissing PMI. So why pay it after the balance of your loan has dropped below the 80% threshold? Your neighborhood may not be heeding the national trends and/or your home may have gained equity before things simmered down, so even when nationwide trends forecast falling home values, you should understand that real estate is local. The toughest thing for many homeowners to understand is just when their home's equity rises above the 20% point. An accredited, licensed real estate appraiser can surely help. As appraisers, it's our job to understand the market dynamics of our area. At Alpine Appraisal, LLC., we know when property values have risen or declined. We're experts at analyzing value trends in Telluride, San Miguel County and surrounding areas. Faced with figures from an appraiser, the mortgage company will usually do away with the PMI with little effort. At that time, the homeowner can enjoy the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: |