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Carney Appraisals can help you remove your Private Mortgage Insurance
A 20% down payment is typically accepted when buying a house.
Since the risk for the lender is usually only the difference between the home value and the sum outstanding on the loan, the 20% provides a nice cushion against the charges of foreclosure, selling the home again, and natural value fluctuations in the event a purchaser defaults.
The market was taking down payments discounted to 10, 5 and frequently 0 percent in the peak of last decade's mortgage boom.
How does a lender manage the increased risk of the low down payment? The answer is Private Mortgage Insurance or PMI.
This added plan covers the lender if a borrower defaults on the loan and the value of the property is lower than the loan balance.
PMI can be costly to a borrower because the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and oftentimes isn't even tax deductible.
It's lucrative for the lender because they acquire the money, and they get paid if the borrower doesn't pay, as opposed to a piggyback loan where the lender takes in all the deficits.
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Has your real estate appreciated since you first purchased? Call Carney Appraisals today at (304) 497-2585. You may be able to save money by removing your Private Mortgage Insurance premium.
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How home buyers can refrain from bearing the expense of PMI
With the passage of The Homeowners Protection Act of 1998, lenders are obligated to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the initial loan amount on nearly all loans.
The law states that, at the request of the home owner, the PMI must be abandoned when the principal amount reaches only 80 percent. So, smart homeowners can get off the hook a little early.
It can take several years to get to the point where the principal is just 80% of the initial amount borrowed, so it's important to know how your West Virginia home has grown in value.
After all, all of the appreciation you've obtained over the years counts towards removing PMI. So why should you pay it after your loan balance has fallen below the 80% mark?
Even when nationwide trends forecast declining home values, understand that real estate is local. Your neighborhood may not be reflecting the national trends and/or your home could have acquired equity before things cooled off.
A certified, West Virginia licensed real estate appraiser can help homeowners figure out if their equity has reached the 20% point, as it's a difficult thing to know.
It is an appraiser's job to know the market dynamics of their area.
At Carney Appraisals, we know when property values have risen or declined. We're experts at recognizing value trends in Frankford, Greenbrier County, and surrounding areas.
When faced with information from an appraiser, the mortgage company will often cancel the PMI with little anxiety. At which time, the homeowner can delight in the savings from that point on.
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Has your real estate appreciated since you first purchased? Contact Carney Appraisals today at (304) 497-2585. You may be able to get rid of your Private Mortgage Insurance premium.
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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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