JKS Appraisal Services, Inc. can help you remove your Private Mortgage InsuranceIt's generally understood that a 20% down payment is accepted when purchasing a home. The lender's only risk is often just the difference 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 natural value fluctuations on the chance that a purchaser doesn't pay.
Lenders were accepting down payments dropping to 10, 5 and often 0 percent in the peak of last decade's mortgage boom. A lender is able to manage the additional risk of the minimal down payment with Private Mortgage Insurance or PMI. This added plan guards the lender in the event a borrower doesn't pay on the loan and the value of the property is lower than what the borrower still owes on the loan.
PMI can be expensive to a borrower in that the $40-$50 a month per $100,000 borrowed is rolled into the mortgage payment and oftentimes isn't even tax deductible. It's advantageous for the lender because they collect the money, and they are covered if the borrower defaults, as opposed to a piggyback loan where the lender absorbs all the costs.
How can buyers keep from bearing the expense of PMI?As a result of The Homeowners Protection Act of 1998, lenders are forced to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the primary loan amount on nearly all loans. The law designates that, at the request of the homeowner, the PMI must be released when the principal amount reaches just 80 percent. So, savvy home owners can get off the hook ahead of time.
It can take a significant number of years to reach the point where the principal is only 80% of the initial amount of the loan, so it's necessary to know how your South Carolina home has increased in value. After all, any appreciation you've obtained over the years counts towards dismissing PMI. So why should you pay it after your loan balance has fallen below the 80% threshold? Even when nationwide trends signify falling home values, be aware that real estate is local. Your neighborhood may not be reflecting the national trends and/or your home might have secured equity before things cooled off.
The difficult thing for many people to determine is whether their home equity has exceeded the 20% point. A certified, South Carolina licensed real estate appraiser can surely help. It's an appraiser's job to know the market dynamics of their area. At JKS Appraisal Services, Inc., we know when property values have risen or declined. We're masters at analyzing value trends in Columbia, Richland County, and surrounding areas. When faced with figures from an appraiser, the mortgage company will often do away with the PMI with little trouble. At which time, the home owner can delight in the savings from that point on.
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