BluValue, LLC can help you remove your Private Mortgage Insurance
It's largely known that a 20% down payment is the standard when getting a mortgage. Considering the liability for the lender is oftentimes only the remainder between the home value and the amount due on the loan, the 20% provides a nice buffer against the charges of foreclosure, selling the home again, and regular value changeson the chance that a purchaser defaults.
During the recent mortgage upturn of the mid 2000s, it was common to see lenders taking down payments of 10, 5 or sometimes 0 percent. A lender is able to manage the added risk of the low down payment with Private Mortgage Insurance or PMI. This supplementary plan guards the lender in the event a borrower defaults on the loan and the value of the home is less than what is owed on the loan.
PMI can be pricey to a borrower in that the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and generally isn't even tax deductible. It's profitable for the lender because they secure the money, and they get the money if the borrower is unable to pay, contradictory to a piggyback loan where the lender consumes 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 homebuyers keep from bearing the cost of PMI?
The Homeowners Protection Act of 1998 makes the lenders on most loans to automatically stop the PMI when the principal balance of the loan equals 78 percent of the initial loan amount. Acute home owners can get off the hook a little early. The law designates that, at the request of the home owner, the PMI must be released when the principal amount equals just 80 percent.
It can take countless years to arrive at the point where the principal is just 20% of the original amount of the loan, so it's essential to know how your home has grown in value. After all, all of the appreciation you've gained over time counts towards abolishing PMI. So why should you pay it after the balance of your loan has dropped below the 80% mark? Despite the fact that nationwide trends indicate decreasing home values, realize that real estate is local. Your neighborhood may not be heeding the national trends and/or your home might have secured equity before things cooled off.
The difficult thing for almost all homeowners to understand is just when their home's equity goes over the 20% point. A certified, licensed real estate appraiser can surely help. It is an appraiser's job to know the market dynamics of their area. At BluValue, LLC, we know when property values have risen or declined. We're masters at determining value trends in Virginia Beach, Virginia Beach City County and surrounding areas. Faced with data from an appraiser, the mortgage company will most often remove the PMI with little anxiety. At that time, the home owner can enjoy the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: