Ulrich Appraisals LLC can help you remove your Private Mortgage InsuranceIt's generally inferred that a 20% down payment is common when getting a mortgage. Because the risk for the lender is generally only the remainder between the home value and the amount outstanding on the loan, the 20% provides a nice cushion against the expenses of foreclosure, reselling the home, and natural value changeson the chance that a purchaser is unable to pay. During the recent mortgage boom of the last decade, it became widespread to see lenders taking down payments of 10, 5 or sometimes 0 percent. How does a lender endure the increased risk of the low down payment? The answer is Private Mortgage Insurance or PMI. PMI takes care of the lender in the event a borrower is unable to pay on the loan and the value of the property is lower than the loan balance. Because the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and generally isn't even tax deductible, PMI is costly to a borrower. Opposite from a piggyback loan where the lender absorbs all the losses, PMI is favorable for the lender because they obtain the money, and they get paid if the borrower is unable to pay. 
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How can homeowners prevent bearing the expense of PMI?With the employment of The Homeowners Protection Act of 1998, on most loans lenders are forced to automatically stop the PMI when the principal balance of the loan reaches 78 percent of the initial loan amount. The law stipulates that, at the request of the homeowner, the PMI must be dropped when the principal amount reaches just 80 percent. So, acute home owners can get off the hook ahead of time. Since it can take many years to reach the point where the principal is only 20% of the original loan amount, it's important to know how your home has grown in value. After all, any appreciation you've achieved over time counts towards dismissing PMI. So why should you pay it after the balance of your loan has fallen below the 80% mark? Despite the fact that nationwide trends indicate plunging home values, realize that real estate is local. Your neighborhood might not be reflecting the national trends and/or your home might have secured equity before things settled down. The hardest thing for many homeowners to know is just when their home's equity rises above the 20% point. A certified, licensed real estate appraiser can definitely help. As appraisers, it's our job to understand the market dynamics of our area. At Ulrich Appraisals LLC, we know when property values have risen or declined. We're masters at recognizing value trends in San Jose, Santa Clara County and surrounding areas. When 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: |