Appraisal Associates of North Georgia can help you remove your Private Mortgage Insurance
It's widely known that a 20% down payment is common when buying a house.
The lender's only exposure is generally just the remainder between the home value and the amount due on the loan, so the 20% provides a nice cushion against the charges of foreclosure, selling the home again, and natural value changes on the chance that a borrower defaults.
During the recent mortgage boom that our country recently experienced, it was common to see lenders only asking for down payments of 10, 5, 3 or often 0 percent.
How does a lender endure the added risk of the low down payment? The answer is Private Mortgage Insurance or PMI.
PMI covers the lender in the event a borrower doesn't pay on the loan and the market price of the house is less than what is owed on the loan.
Since the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and many times isn't even tax deductible, PMI can be costly to a borrower.
It's beneficial for the lender because they collect the money, and they are covered if the borrower defaults, unlike a piggyback loan where the lender takes in all the deficits.
The money you keep from dropping your PMI will make up for the cost of the appraisal in a matter of months. Appraisal Associates of North Georgia are experts when it comes to value trends in the city of Athens and Clarke County. Contact us today.
How home owners can avoid bearing the expense of PMI
As a result of The Homeowners Protection Act of 1998, lenders are required to automatically terminate the PMI when the principal balance of the loan equals 78 percent of the initial loan amount on nearly all loans.
Savvy homeowners can get off the hook beforehand. The law promises that, at the request of the home owner, the PMI must be dropped when the principal amount equals only 80 percent.
It can take a significant number of years to reach the point where the principal is just 80% of the original loan amount, so it's essential to know how your Georgia home has increased in value.
After all, all of the appreciation you've accomplished over time counts towards dismissing PMI. So why pay it after the balance of your loan has dropped below the 80% mark?
Your neighborhood might not adhere to national trends and/or your home might have acquired equity before the economy simmered down. So even when nationwide trends hint at a reduction in home values, you should know most importantly that real estate is local.
The hardest thing for almost all homeowners to figure out is whether their home equity has exceeded the 20% point. An accredited, Georgia licensed real estate appraiser can certainly help.
It is an appraiser's job to know the market dynamics of their area.
At Appraisal Associates of North Georgia, we're experts at determining value trends in Athens, Clarke County, and surrounding areas, and we know when property values have risen or declined.
When faced with data from an appraiser, the mortgage company will generally cancel the PMI with little anxiety. At that time, the home owner can enjoy the savings from that point on.
Is PMI something increasing your monthly house 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.
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