Graydon Property Services, LLC. can help you remove your Private Mortgage InsuranceA 20% down payment is usually the standard when purchasing a home. The lender's liability is oftentimes only the remainder between the home value and the amount remaining on the loan, so the 20% adds a nice cushion against the expenses of foreclosure, selling the home again, and typical value variations in the event a purchaser doesn't pay.Banks were working with down payments discounted to 10, 5 and often 0 percent in the peak of last decade's mortgage boom. A lender is able to endure the added risk of the small down payment with Private Mortgage Insurance or PMI. PMI protects the lender in the event a borrower is unable to pay on the loan and the value of the property is less than what is owed on the loan. Because the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and on many occasions isn't even tax deductible, PMI is costly to a borrower. It's money-making for the lender because they acquire the money, and they get the money if the borrower is unable to pay, unlike a piggyback loan where the lender consumes all the damages.
How can homebuyers keep from bearing the cost of PMI?With the passage of The Homeowners Protection Act of 1998, lenders are forced to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the initial loan amount on nearly all loans. Smart home owners can get off the hook a little early. The law stipulates that, at the request of the homeowner, the PMI must be dropped when the principal amount reaches only 80 percent.It can take many years to reach the point where the principal is just 80% of the initial amount borrowed, so it's essential to know how your South Carolina home has appreciated in value. After all, all of the appreciation you've gained over the years counts towards removing PMI. So why pay it after the balance of your loan has dropped below the 80% threshold? Even when nationwide trends signify falling home values, realize that real estate is local. Your neighborhood may not be adhering to the national trends and/or your home could have gained equity before things simmered down. The toughest thing for many homeowners to determine is whether their home equity has exceeded the 20% point. An accredited, South Carolina licensed real estate appraiser can surely help. It's an appraiser's job to understand the market dynamics of their area. At Graydon Property Services, LLC., we know when property values have risen or declined. We're masters at pinpointing value trends in Easley, Pickens County, and surrounding areas. When faced with data from an appraiser, the mortgage company will most often eliminate the PMI with little trouble. At that time, the home owner can retain the savings from that point on.
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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