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Have equity in your home? Want a lower payment? An appraisal from Moore Appraisal Company can help you get rid of your PMI.
A 20% down payment is typically the standard when buying a house.
Since the liability for the lender is usually only the difference between the home value and the amount outstanding on the loan, the 20% provides a nice buffer against the expenses of foreclosure, selling the home again, and typical value changes on the chance that a borrower 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, 3 or sometimes 0 percent.
How does a lender endure the added risk of the low down payment? The answer is Private Mortgage Insurance or PMI.
PMI guards the lender in case a borrower defaults on the loan and the value of the home is lower than what is owed on the loan.
Because the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and oftentimes isn't even tax deductible, PMI can be expensive to a borrower.
It's advantageous for the lender because they obtain the money, and they are covered if the borrower doesn't pay, separate from a piggyback loan where the lender takes in all the damages.
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Does your monthly mortgage payment have a lineitem for PMI? Call Moore Appraisal Company today at (205) 921-5555 or send us an e-mail. Documentation of your home's present value could save you thousands.
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How can a home buyer refrain from paying PMI?
The Homeowners Protection Act of 1998 obligates the lenders on most loans to automatically cease the PMI when the principal balance of the loan equals 78 percent of the original loan amount.
The law guarantees that, at the request of the homeowner, the PMI must be released when the principal amount equals just 80 percent. So, wise home owners can get off the hook ahead of time.
Because it can take many years to reach the point where the principal is just 80% of the original amount borrowed, it's crucial to know how your Alabama home has appreciated in value.
After all, any appreciation you've obtained over time counts towards abolishing PMI. So what's the reason for paying it after the balance of your loan has dropped below the 80% threshold?
Even when nationwide trends indicate falling home values, be aware that real estate is local. Your neighborhood might not be adhering to the national trends and/or your home may have gained equity before things declined.
The difficult thing for most homeowners to determine is just when their home's equity goes over the 20% point. An accredited, Alabama licensed real estate appraiser can surely help.
As appraisers, it's our job to keep up with the market dynamics of our area.
At Moore Appraisal Company, we know when property values have risen or declined. We're masters at determining value trends in Hamilton, Marion County, and surrounding areas.
Faced with data from an appraiser, the mortgage company will usually remove the PMI with little anxiety. At that time, the home owner can retain the savings from that point on.
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Does your monthly mortgage payment have a lineitem for PMI? Call Moore Appraisal Company today at (205) 921-5555 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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