DANIEL I KANDEL can help you remove your Private Mortgage Insurance
It's generally inferred that a 20% down payment is the standard when purchasing a home. The lender's liability is usually only the remainder between the home value and the amount due on the loan, so the 20% provides a nice cushion against the expenses of foreclosure, selling the home again, and typical value fluctuations in the event a purchaser defaults.
During the recent mortgage boom of the mid 2000s, it was common to see lenders taking down payments of 10, 5 or sometimes 0 percent. A lender is able to handle the additional risk of the low down payment with Private Mortgage Insurance or PMI. This additional plan covers the lender in case a borrower is unable to pay on the loan and the worth of the house is lower 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 compiled into the mortgage payment and oftentimes isn't even tax deductible. It's advantageous for the lender because they collect the money, and they receive payment if the borrower doesn't pay, different from a piggyback loan where the lender absorbs all the damages.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How can homeowners keep from bearing the cost of PMI?
With the utilization of The Homeowners Protection Act of 1998, on most loans lenders are forced to automatically cease the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount. Smart homeowners can get off the hook a little early. The law stipulates that, at the request of the home owner, the PMI must be dropped when the principal amount equals only 80 percent.
Since it can take countless years to arrive at the point where the principal is only 20% of the original amount borrowed, it's crucial to know how your home has increased in value. After all, any appreciation you've achieved over the years counts towards dismissing PMI. So why should you pay it after your loan balance has dropped below the 80% threshold? Despite the fact that nationwide trends forecast plunging home values, understand that real estate is local. Your neighborhood may not be heeding the national trends and/or your home could have gained equity before things simmered down.
An accredited, licensed real estate appraiser can help homeowners understand just when their home's equity rises above the 20% point, as it's a difficult thing to know. As appraisers, it's our job to understand the market dynamics of our area. At DANIEL I KANDEL, we know when property values have risen or declined. We're masters at pinpointing value trends in Weston/Ft. Lauderdale, Broward County and surrounding areas. Faced with data from an appraiser, the mortgage company will most often cancel the PMI with little effort. At that time, the home owner can delight in the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: