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Let Triangle Appraisal, Ltd. help you determine if you can eliminate your PMIA 20% down payment is usually the standard when purchasing a home. Because the liability for the lender is generally only the remainder between the home value and the amount outstanding on the loan, the 20% supplies a nice cushion against the charges of foreclosure, selling the home again, and natural value fluctuations in the event a purchaser is unable to pay.
During the recent mortgage boom that our country recently experienced, it was customary to see lenders only asking for down payments of 10, 5 or sometimes 0 percent. How does a lender manage the increased risk of the small down payment? The answer is Private Mortgage Insurance or PMI. PMI protects the lender in case a borrower is unable to pay on the loan and the market price of the home is less than the loan balance.
PMI is costly to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and often isn't even tax deductible. It's beneficial for the lender because they acquire the money, and they are covered if the borrower defaults, unlike a piggyback loan where the lender takes in all the losses.
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Did you secure your mortgage with less than 20% down? Contact Triangle Appraisal, Ltd. today at 708-476-0151 to see if you can get rid of your Private Mortgage Insurance payment. |
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How buyers can refrain from bearing the expense of PMI With the passage of The Homeowners Protection Act of 1998, lenders are forced to automatically cease the PMI when the principal balance of the loan equals 78 percent of the initial loan amount on most loans. Acute home owners can get off the hook a little early. The law pledges that, upon request of the homeowner, the PMI must be released when the principal amount reaches just 80 percent.
Since it can take many years to reach the point where the principal is only 80% of the original amount of the loan, it's necessary to know how your Illinois home has appreciated in value. After all, every bit of appreciation you've obtained over the years counts towards abolishing PMI. So why pay it after your loan balance has dropped below the 80% threshold? Even when nationwide trends forecast declining home values, realize that real estate is local. Your neighborhood may not be following the national trends and/or your home might have secured equity before things declined.
An accredited, Illinois licensed real estate appraiser can help homeowners figure out if their equity has made it to the 20% point, as it's a hard thing to know. It is an appraiser's job to recognize the market dynamics of their area. At Triangle Appraisal, Ltd., we're masters at recognizing value trends in Hickory Hills, Cook County, and surrounding areas, and we know when property values have risen or declined. Faced with data from an appraiser, the mortgage company will most often eliminate the PMI with little effort. At which time, the home owner can enjoy the savings from that point on.
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Is PMI a lineitem in your monthly house payment? Call Triangle Appraisal, Ltd. today at 708-476-0151 or send us an e-mail. Documentation of your home's current 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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