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Let Alan Harvey help you discover if you can get rid of your PMI
When purchasing a home, a 20% down payment is typically the standard.
Considering the liability for the lender is generally only the remainder between the home value and the sum remaining on the loan, the 20% supplies a nice cushion against the expenses of foreclosure, reselling the home, and typical value changes in the event a purchaser defaults.
During the recent mortgage boom of the mid 2000s, it was common to see lenders making deals with down payments of 10, 5 or even 0 percent.
A lender is able to handle the increased risk of the reduced down payment with Private Mortgage Insurance or PMI.
This added policy takes care of the lender in the event a borrower is unable to pay on the loan and the value of the property is lower than the balance of the loan.
Because the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and oftentimes isn't even tax deductible, PMI can be costly to a borrower.
As opposed to a piggyback loan where the lender absorbs all the losses, PMI is beneficial for the lender because they collect the money, and they get the money if the borrower is unable to pay.
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The money you keep from getting rid of the PMI required when you got your mortgage will make up for the cost of the appraisal in a matter of months. Alan Harvey are experts when it comes to value trends in the city of Kirkland and King County. Contact us today.
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How home owners can prevent bearing the expense of PMI
As a result of The Homeowners Protection Act of 1998, lenders are forced to automatically stop the PMI when the principal balance of the loan equals 78 percent of the primary loan amount on nearly all loans.
Wise home owners can get off the hook sooner than expected. The law designates that, upon request of the home owner, the PMI must be dropped when the principal amount reaches only 80 percent.
It can take a significant number of years to reach the point where the principal is only 80% of the original amount borrowed, so it's important to know how your Washington home has increased in value.
After all, every bit of appreciation you've obtained over the years counts towards abolishing PMI. So what's the reason for paying it after the balance of your loan has fallen below the 80% mark?
Your neighborhood may not conform to national trends and/or your home might have acquired equity before things cooled off. So even when nationwide trends predict decreasing home values, you should know most importantly that real estate is local.
A certified, Washington licensed real estate appraiser can help home owners figure out if their equity has exceeed the 20% point, as it's a difficult thing to know.
It's an appraiser's job to keep up with the market dynamics of their area.
At Alan Harvey , we know when property values have risen or declined. We're masters at determining value trends in Kirkland, King County, and surrounding areas.
When faced with data from an appraiser, the mortgage company will usually do away with 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 real estate appreciated since you first purchased? Call Alan Harvey today at 4256819516 to see if you can get rid of 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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