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Have equity in your home? Want a lower payment? An appraisal from Kent & Associates Appraisal can help you get rid of your PMI.
When getting a mortgage, a 20% down payment is typically the standard.
The lender's only risk is generally just the remainder between the home value and the amount due on the loan, so the 20% supplies a nice cushion against the expenses of foreclosure, selling the home again, and typical value variations in the event a purchaser defaults.
Banks were taking down payments as low as 10, 5 and even 0 percent in the peak of last decade's mortgage boom.
A lender is able to manage the added risk of the low down payment with Private Mortgage Insurance or PMI.
This supplemental plan protects the lender in the event a borrower is unable to pay on the loan and the value of the property is less than what the borrower still owes on the loan.
PMI can be pricey to a borrower in that the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and oftentimes isn't even tax deductible.
As opposed to a piggyback loan where the lender absorbs all the losses, PMI is favorable for the lender because they acquire the money, and they receive payment if the borrower is unable to pay.
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The amount you keep from dropping your PMI will make up for the cost of the appraisal in no time. Nobody is more qualified than Kent & Associates Appraisal when it comes to appreciating values in the city of Everett and Snohomish County. Contact us today.
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How can home owners prevent bearing the cost of PMI?
The Homeowners Protection Act of 1998 requires the lenders on nearly all loans to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount.
The law promises that, at the request of the home owner, the PMI must be dropped when the principal amount reaches only 80 percent. So, savvy homeowners can get off the hook sooner than expected.
Considering it can take many years to get to the point where the principal is just 80% of the initial amount of the loan, it's essential to know how your Washington home has appreciated in value.
After all, every bit of appreciation you've obtained over time counts towards removing PMI. So what's the reason for paying it after the balance of your loan has dropped below the 80% threshold?
Even when nationwide trends indicate declining home values, realize that real estate is local. Your neighborhood might not be adopting the national trends and/or your home may have acquired equity before things cooled off.
The difficult thing for most consumers to determine is just when their home's equity rises above the 20% point. A certified, Washington licensed real estate appraiser can certainly help.
Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job!
At Kent & Associates Appraisal, we're masters at analyzing value trends in Everett, Snohomish County, and surrounding areas, and we know when property values have risen or declined.
When faced with figures from an appraiser, the mortgage company will generally drop the PMI with little effort. At that time, the homeowner can enjoy the savings from that point on.
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Does your monthly house payment have a lineitem for PMI? Call Kent & Associates Appraisal today at 425-337-3863 or send us an e-mail. A current appraisal could save you thousands.
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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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