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Nobles Appraisal Express can help you remove your Private Mortgage Insurance
When purchasing a home, a 20% down payment is usually the standard.
Since the risk for the lender is usually only the difference between the home value and the sum outstanding on the loan, the 20% provides a nice buffer against the costs of foreclosure, reselling the home, and typical value variations in the event a borrower doesn't pay.
The market was taking down payments as low as 10, 5 and frequently 0 percent during the mortgage boom of the mid 2000s.
How does a lender handle the increased risk of the small down payment? The solution is Private Mortgage Insurance or PMI.
PMI guards the lender in the event a borrower defaults on the loan and the value of the property is less than what is owed on the loan.
Since the $40-$50 a month per $100,000 borrowed is lumped into the mortgage monthly payment and many times isn't even tax deductible, PMI is costly to a borrower.
Instead of a piggyback loan where the lender takes in all the losses, PMI is money-making for the lender because they secure the money, and they are covered if the borrower defaults.
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Has your real estate appreciated since you first purchased? Contact Nobles Appraisal Express today at (614) 899-6943 to see if you can cancel your Private Mortgage Insurance premium.
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How can homeowners avoid bearing the cost of PMI?
With the implementation 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 primary loan amount on nearly all loans.
The law promises that, upon request of the home owner, the PMI must be abandoned when the principal amount reaches just 80 percent. So, savvy homeowners can get off the hook sooner than expected.
It can take many years to reach the point where the principal is just 80% of the original amount borrowed, so it's crucial to know how your Ohio home has increased in value.
After all, every bit of appreciation you've accomplished over the years counts towards abolishing PMI. So why should you pay it after the balance of your loan has fallen below the 80% threshold?
Your neighborhood might not follow national trends and/or your home might have gained equity before the economy declined. So even when nationwide trends signify falling home values, you should understand that real estate is local.
An accredited, Ohio licensed real estate appraiser can help homeowners figure out if their equity has made it to the 20% point, as it's a hard thing to know.
It's an appraiser's job to keep up with the market dynamics of their area.
At Nobles Appraisal Express, we're experts at identifying value trends in Westerville, Franklin County, and surrounding areas, and we know when property values have risen or declined.
Faced with information from an appraiser, the mortgage company will most often remove the PMI with little trouble. At which time, the home owner can delight in the savings from that point on.
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The money you keep from getting rid of the PMI required when you got your mortgage will make up for the price of the appraisal in a matter of months. Nobles Appraisal Express are experts when it comes to value trends in Westerville and Franklin County. Contact us today.
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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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