Let Appraisal Associates of North Georgia help you discover if you can cancel your PMI
It's generally understood that a 20% down payment is common when getting a mortgage.
The lender's only exposure is typically just the remainder between the home value and the amount due on the loan, so the 20% provides a nice buffer against the expenses of foreclosure, selling the home again, and regular value changes on the chance that a borrower is unable to pay.
The market was accepting down payments as low as 10, 5 and even 0 percent during the mortgage boom of the mid 2000s.
How does a lender manage the additional risk of the small down payment? The answer is Private Mortgage Insurance or PMI.
PMI takes care of the lender if a borrower is unable to pay on the loan and the market price of the home is lower than the balance of the loan.
PMI can be pricey to a borrower in that the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and frequently isn't even tax deductible.
It's beneficial for the lender because they collect the money, and they receive payment if the borrower defaults, different from a piggyback loan where the lender absorbs all the losses.
The amount you keep from cancelling the PMI required when you got your mortgage pays for the appraisal in a matter of months. Nobody is more qualified than Appraisal Associates of North Georgia when it comes to appreciating values in the city of Athens and Clarke County. Contact us today.
How homeowners can refrain from paying PMI
As a result of The Homeowners Protection Act of 1998, lenders are required to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the primary loan amount on nearly all loans.
Wise homeowners can get off the hook sooner than expected. The law promises that, upon request of the homeowner, the PMI must be abandoned when the principal amount equals just 80 percent.
Since it can take many years to reach the point where the principal is only 80% of the original amount borrowed, it's important to know how your Georgia home has increased in value.
After all, every bit of appreciation you've accomplished over time counts towards abolishing PMI. So why should you pay it after the balance of your loan has fallen below the 80% threshold?
Your neighborhood might not adhere to national trends and/or your home could have gained equity before the economy declined. So even when nationwide trends signify declining home values, you should understand that real estate is local.
A certified, Georgia licensed real estate appraiser can help home owners figure out just when their home's equity goes over the 20% point, as it's a difficult thing to know.
As appraisers, it's our job to recognize the market dynamics of our area.
At Appraisal Associates of North Georgia, we know when property values have risen or declined. We're experts at recognizing value trends in Athens, Clarke County, and surrounding areas.
Faced with information from an appraiser, the mortgage company will generally drop the PMI with little trouble. At which time, the homeowner can delight in the savings from that point on.
The savings from dropping your PMI will make up for the price of the appraisal in a matter of months. Appraisal Associates of North Georgia is in the business of tracking real estate value trends in Athens and Clarke County. Contact us today.
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