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Let Phoenix Valuations, LLC help you figure out if you can cancel your PMI
When buying a house, a 20% down payment is typically the standard.
The lender's only liability is usually just the remainder between the home value and the sum due on the loan, so the 20% supplies a nice cushion against the expenses of foreclosure, reselling the home, and typical value fluctuations on the chance that a purchaser defaults.
The market was accepting down payments dropping to 10, 5 and even 0 percent during the mortgage boom of the last decade.
A lender is able to manage the additional risk of the minimal down payment with Private Mortgage Insurance or PMI.
This additional policy takes care of the lender in the event a borrower defaults on the loan and the market price of the property is lower than what the borrower still owes on the loan.
PMI can be expensive to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and frequently isn't even tax deductible.
It's advantageous for the lender because they collect the money, and they are covered if the borrower doesn't pay, separate from a piggyback loan where the lender takes in all the deficits.
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Is PMI a lineitem in your monthly house payment? Call Phoenix Valuations, LLC today at 480.634.5980 or send us an e-mail. A current appraisal could save you thousands.
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How home owners can avoid bearing the expense of PMI
The Homeowners Protection Act of 1998 obligates the lenders on most loans to automatically stop the PMI when the principal balance of the loan equals 78 percent of the original loan amount.
Smart home owners can get off the hook a little early. The law designates that, at the request of the home owner, the PMI must be dropped when the principal amount equals just 80 percent.
It can take a significant number of years to get to the point where the principal is just 80% of the original loan amount, so it's important to know how your Arizona home has appreciated in value.
After all, any appreciation you've accomplished over time counts towards abolishing PMI. So why should you pay it after the balance of your loan has dropped below the 80% threshold?
Your neighborhood might not follow national trends and/or your home might have acquired equity before things simmered down. So even when nationwide trends signify falling home values, you should understand that real estate is local.
An accredited, Arizona licensed real estate appraiser can help homeowners figure out just when their home's equity rises above the 20% point, as it's a difficult thing to know.
As appraisers, it's our job to know the market dynamics of our area.
At Phoenix Valuations, LLC, we're experts at pinpointing value trends in Scottsdale, Maricopa County, and surrounding areas, and we know when property values have risen or declined.
When faced with information from an appraiser, the mortgage company will often drop the PMI with little trouble. At that time, the home owner can delight in the savings from that point on.
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Has your home value appreciated since you first purchased? Contact Phoenix Valuations, LLC today at 480.634.5980 to see if you can save money by removing your Private Mortgage Insurance payment.
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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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