Let Appraisal Associates of North Georgia help you determine if you can eliminate your PMI
A 20% down payment is usually the standard when getting a mortgage.
The lender's only exposure is usually just the remainder between the home value and the sum outstanding on the loan, so the 20% provides a nice cushion against the costs of foreclosure, reselling the home, and typical value variations in the event a borrower defaults.
The market was taking down payments discounted to 10, 5 and frequently 0 percent in the peak of last decade's mortgage boom.
A lender is able to manage the increased risk of the reduced down payment with Private Mortgage Insurance or PMI.
This added plan guards the lender in case a borrower defaults on the loan and the value of the property is less than what the borrower still owes on the loan.
PMI can be costly to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and oftentimes isn't even tax deductible.
Unlike a piggyback loan where the lender takes in all the deficits, PMI is lucrative for the lender because they secure the money, and they get paid if the borrower defaults.
Is PMI included in your monthly mortgage payment? Call Appraisal Associates of North Georgia today at 706-546-7196 or send us an e-mail. Documentation of your home's current value could save you thousands.
How can a home buyer refrain from bearing the cost of PMI?
With the implementation of The Homeowners Protection Act of 1998, lenders are forced to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount on most loans.
Savvy homeowners can get off the hook a little earlier. The law designates that, upon request of the home owner, the PMI must be released when the principal amount equals only 80 percent.
It can take many years to get to the point where the principal is just 80% of the initial amount of the loan, so it's important to know how your Georgia home has grown in value.
After all, any appreciation you've obtained over time counts towards abolishing PMI. So why pay it after your loan balance has fallen below the 80% mark?
Your neighborhood may not adhere to national trends and/or your home could have secured equity before things cooled off. So even when nationwide trends signify declining home values, you should understand that real estate is local.
The difficult thing for most homeowners to figure out is just when their home's equity rises above the 20% point. A certified, Georgia licensed real estate appraiser can surely help.
Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job!
At Appraisal Associates of North Georgia, we know when property values have risen or declined. We're masters at identifying value trends in Athens, Clarke County, and surrounding areas.
When faced with data from an appraiser, the mortgage company will usually eliminate the PMI with little effort. At that time, the homeowner can delight in the savings from that point on.
Did you secure your mortgage with less than 20% down? Contact Appraisal Associates of North Georgia today at 706-546-7196. You may be able to cancel your Private Mortgage Insurance payment.
Want to learn more about PMI and the Homeowners Protection Act? Click this link:
