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Have equity in your home? Want a lower payment? An appraisal from Hoffman Appraisals, LLC can help you get rid of your PMI.
When buying a house, a 20% down payment is typically the standard.
Considering the risk for the lender is generally only the remainder between the home value and the amount remaining on the loan, the 20% supplies a nice buffer against the expenses of foreclosure, selling the home again, and natural value changes on the chance that a purchaser doesn't pay.
During the recent mortgage boom that our country recently experienced, it was common to see lenders only asking for down payments of 10, 5, 3 or even 0 percent.
A lender is able to handle the increased risk of the minimal down payment with Private Mortgage Insurance or PMI.
This added policy guards the lender in case a borrower doesn't pay on the loan and the market price of the property is less than what the borrower still owes on the loan.
PMI can be costly to a borrower because the $40-$50 a month per $100,000 borrowed is rolled into the mortgage payment and often isn't even tax deductible.
It's beneficial for the lender because they acquire the money, and they receive payment if the borrower doesn't pay, different from a piggyback loan where the lender consumes all the losses.
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The savings from cancelling the PMI required when you got your mortgage pays for the appraisal in a matter of months. Hoffman Appraisals, LLC are experts when it comes to value trends in the city of Locust Grove and Orange County. Contact us today.
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How home owners can keep from bearing the cost of PMI
The Homeowners Protection Act of 1998 makes the lenders on most loans to automatically eliminate the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount.
The law stipulates that, upon request of the homeowner, the PMI must be abandoned when the principal amount equals only 80 percent. So, wise homeowners can get off the hook ahead of time.
It can take many years to get to the point where the principal is only 80% of the original loan amount, so it's necessary to know how your Virginia home has increased in value.
After all, all of the appreciation you've acquired over time counts towards removing PMI. So why pay it after the balance of your loan has fallen below the 80% mark?
Even when nationwide trends hint at falling home values, be aware that real estate is local. Your neighborhood might not be following the national trends and/or your home could have secured equity before things cooled off.
The difficult thing for many consumers to determine is whether their home equity has exceeded the 20% point. An accredited, Virginia licensed real estate appraiser can definitely help.
It is an appraiser's job to know the market dynamics of their area.
At Hoffman Appraisals, LLC, we know when property values have risen or declined. We're masters at recognizing value trends in Locust Grove, Orange County, and surrounding areas.
Faced with data from an appraiser, the mortgage company will usually cancel the PMI with little trouble. At that time, the home owner can enjoy the savings from that point on.
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Does your monthly loan payment include a fee for PMI? Call Hoffman Appraisals, LLC today at 5409725770 or send us an e-mail. Documentation of your home's present value could save you thousands.
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Want to learn more about PMI and the Homeowners Protection Act? Click this link:
Cancellation of Private Mortgage Insurance: Federal Law May Save You Hundreds of Dollars Each Year
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