Zacour & Associates, Inc. can help you remove your Private Mortgage InsuranceIt's typically known that a 20% down payment is accepted when buying a house. The lender's risk is often only the remainder between the home value and the sum remaining on the loan, so the 20% supplies a nice buffer against the costs of foreclosure, reselling the home, and regular value changes on the chance that a purchaser is unable to pay. During the recent mortgage boom of the mid 2000s, it was customary to see lenders commanding down payments of 10, 5 or sometimes 0 percent. How does a lender endure the additional risk of the low down payment? The answer is Private Mortgage Insurance or PMI. This additional policy covers the lender if a borrower defaults on the loan and the value of the property is less than the loan balance. Because the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and frequently isn't even tax deductible, PMI can be costly to a borrower. Opposite from a piggyback loan where the lender consumes all the costs, PMI is money-making for the lender because they acquire the money, and they get paid if the borrower defaults. 
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How can a homebuyer prevent bearing the expense of PMI?With the implementation of The Homeowners Protection Act of 1998, on most loans lenders are obligated to automatically eliminate the PMI when the principal balance of the loan reaches 78 percent of the original loan amount. The law designates that, upon request of the home owner, the PMI must be released when the principal amount reaches just 80 percent. So, savvy homeowners can get off the hook a little earlier. It can take many years to reach the point where the principal is just 20% of the initial loan amount, so it's necessary to know how your home has increased in value. After all, any appreciation you've achieved over the years counts towards removing PMI. So what's the reason for paying it after your loan balance has fallen below the 80% threshold? Even when nationwide trends indicate declining home values, understand that real estate is local. Your neighborhood may not be adopting the national trends and/or your home may have gained equity before things calmed down. The hardest thing for many homeowners to know is just when their home's equity rises above the 20% point. An accredited, licensed real estate appraiser can certainly help. As appraisers, it's our job to understand the market dynamics of our area. At Zacour & Associates, Inc., we know when property values have risen or declined. We're masters at recognizing value trends in El Paso, El Paso County and surrounding areas. Faced with figures from an appraiser, the mortgage company will generally eliminate the PMI with little anxiety. At which time, the home owner can retain the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: |