Let M.E. Edgy Enterprises, Inc. help you determine if you can cancel your PMIWhen purchasing a home, a 20% down payment is usually the standard. Since the risk for the lender is often only the difference between the home value and the amount due on the loan, the 20% provides a nice buffer against the expenses of foreclosure, selling the home again, and natural value variationson the chance that a borrower doesn't pay. Lenders were working with down payments as low as 10, 5 and often 0 percent in the peak of last decade's mortgage boom. A lender is able to manage the added risk of the reduced down payment with Private Mortgage Insurance or PMI. This additional policy covers the lender in case a borrower defaults on the loan and the value of the house is lower than the loan balance. PMI is costly 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. Opposite from a piggyback loan where the lender consumes all the damages, PMI is favorable for the lender because they collect the money, and they receive payment if the borrower doesn't pay. 
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 cost of PMI?The Homeowners Protection Act of 1998 requires the lenders on most loans to automatically stop the PMI when the principal balance of the loan reaches 78 percent of the primary loan amount. The law guarantees that, at the request of the homeowner, the PMI must be released when the principal amount reaches just 80 percent. So, wise home owners can get off the hook a little early. It can take many years to arrive at the point where the principal is only 20% of the original amount of the loan, so it's necessary to know how your home has increased in value. After all, any appreciation you've obtained over the years counts towards dismissing PMI. So why should you pay it after the balance of your loan has dropped below the 80% threshold? Despite the fact that nationwide trends predict plummeting home values, be aware that real estate is local. Your neighborhood might not be heeding the national trends and/or your home might have gained equity before things settled down. A certified, licensed real estate appraiser can help homeowners understand just when their home's equity goes over the 20% point, as it's a hard thing to know. As appraisers, it's our job to know the market dynamics of our area. At M.E. Edgy Enterprises, Inc., we know when property values have risen or declined. We're experts at recognizing value trends in Brunswick, Glynn County and surrounding areas. When faced with data from an appraiser, the mortgage company will most often do away with the PMI with little trouble. At that time, the homeowner can retain the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: |