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Have equity in your home? Want a lower payment? An appraisal from Piper Company can help you get rid of your PMI.
A 20% down payment is typically accepted when buying a house.
The lender's liability is generally only the difference between the home value and the amount outstanding on the loan, so the 20% adds a nice cushion against the expenses of foreclosure, selling the home again, and typical value fluctuations in the event a purchaser is unable to pay.
Banks were working with down payments as low as 10, 5 and even 0 percent in the peak of last decade's mortgage boom.
How does a lender manage the added risk of the low down payment? The solution is Private Mortgage Insurance or PMI.
This supplemental policy takes care of the lender in the event a borrower is unable to pay on the loan and the value of the property is less than the balance of the loan.
PMI can be pricey to a borrower because the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and frequently isn't even tax deductible.
Unlike a piggyback loan where the lender takes in all the losses, PMI is favorable for the lender because they secure the money, and they get the money if the borrower defaults.
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Does your monthly house payment have a lineitem for PMI? Call Piper Company today at 253 845-9322 or send us an e-mail. Documentation of your home's current value could save you thousands.
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How can home buyers prevent bearing the cost of PMI?
The Homeowners Protection Act of 1998 requires the lenders on most loans to automatically terminate the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount.
The law guarantees that, at the request of the home owner, the PMI must be released when the principal amount reaches only 80 percent. So, keen home owners can get off the hook a little earlier.
Since it can take many years to arrive at the point where the principal is just 80% of the original amount of the loan, it's necessary to know how your Washington home has increased in value.
After all, any appreciation you've obtained over time counts towards abolishing PMI. So what's the reason for paying it after the balance of your loan has dropped below the 80% mark?
Even when nationwide trends signify decreasing home values, be aware that real estate is local. Your neighborhood might not be adhering to the national trends and/or your home may have acquired equity before things cooled off.
A certified, Washington licensed real estate appraiser can help home owners figure out just when their home's equity rises above 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 Piper Company, we know when property values have risen or declined. We're experts at analyzing value trends in Edgewood, Pierce County, and surrounding areas.
When faced with information from an appraiser, the mortgage company will usually drop the PMI with little anxiety. At which time, the homeowner can delight in the savings from that point on.
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The money you keep from cancelling your PMI pays for the appraisal in no time. Piper Company has years of experience with value trends in Edgewood and Pierce 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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