Have equity in your home? Want a lower payment? An appraisal from Rehkemper Brothers, LLC can help you get rid of your PMI.It's generally inferred that a 20% down payment is accepted when buying a house. Considering the liability for the lender is often only the difference between the home value and the sum outstanding on the loan, the 20% supplies a nice buffer against the charges of foreclosure, reselling the home, and regular value variations on the chance that a borrower defaults.Banks were accepting down payments dropping to 10, 5 and frequently 0 percent during the mortgage boom of the last decade. How does a lender manage the added risk of the low down payment? The solution is Private Mortgage Insurance or PMI. This added policy takes care of the lender in the event a borrower doesn't pay on the loan and the value of the property is less than what is owed on the loan. PMI is pricey to a borrower in that the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and often isn't even tax deductible. It's beneficial for the lender because they secure the money, and they get paid if the borrower defaults, as opposed to a piggyback loan where the lender absorbs all the costs.
How can a home owner avoid paying PMI?With the passage 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 original loan amount on most loans. The law stipulates that, at the request of the homeowner, the PMI must be abandoned when the principal amount reaches only 80 percent. So, smart home owners can get off the hook a little early.It can take a significant number of years to arrive at the point where the principal is only 80% of the initial amount borrowed, so it's crucial to know how your Hawaii home has grown in value. After all, any appreciation you've obtained over the years counts towards removing PMI. So why pay it after your loan balance has fallen below the 80% threshold? Even when nationwide trends indicate lower overall home values, understand that real estate is local. Your neighborhood may not be following the national trends and/or your home could have gained equity before things simmered down. A certified, Hawaii licensed real estate appraiser can help homeowners figure out just when their home's equity goes over the 20% point, as it's a hard thing to know. It's an appraiser's job to understand the market dynamics of their area. At Rehkemper Brothers, LLC, we know when property values have risen or declined. We're masters at determining value trends in Mililani, Honolulu County, and surrounding areas. When faced with information from an appraiser, the mortgage company will generally drop the PMI with little effort. At that time, the home owner can enjoy 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
|
||||||||||||||||||
