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Alexa Appraisal (703) 425-2581 can help you remove your Private Mortgage Insurance
A 20% down payment is usually the standard when buying a house.
The lender's liability is generally only the difference between the home value and the balance outstanding on the loan, so the 20% supplies a nice buffer against the costs of foreclosure, reselling the home, and typical value fluctuations on the chance that a borrower doesn't pay.
Banks were working with down payments dropping to 10, 5 and often 0 percent in the peak of last decade's mortgage boom.
A lender is able to endure the increased risk of the reduced down payment with Private Mortgage Insurance or PMI.
This supplemental policy protects the lender in case a borrower is unable to pay on the loan and the market price of the property is less than what is owed on the loan.
Since the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and many times isn't even tax deductible, PMI can be expensive to a borrower.
Instead of a piggyback loan where the lender absorbs all the losses, PMI is profitable for the lender because they secure the money, and they get the money if the borrower doesn't pay.
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The savings from dropping the PMI required when you got your mortgage pays for the appraisal in no time. Nobody is more qualified than Alexa Appraisal (703) 425-2581 when it comes to appreciating values in the city of Fairfax Station and Fairfax County. Contact us today.
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How buyers can keep from bearing the cost of PMI
With the implementation of The Homeowners Protection Act of 1998, lenders are obligated to automatically terminate the PMI when the principal balance of the loan reaches 78 percent of the initial loan amount on nearly all loans.
Acute home owners can get off the hook beforehand. The law designates that, upon request of the homeowner, the PMI must be dropped when the principal amount reaches only 80 percent.
Because it can take a significant number of years to arrive at the point where the principal is only 80% of the initial amount of the loan, it's important to know how your Virginia home has increased in value.
After all, all of the appreciation you've achieved over the years counts towards removing PMI. So why pay it after your loan balance has dropped below the 80% threshold?
Even when nationwide trends signify falling home values, realize that real estate is local. Your neighborhood might not be reflecting the national trends and/or your home could have gained equity before things declined.
An accredited, Virginia licensed real estate appraiser can help home owners figure out just when their home's equity rises above the 20% point, as it's a difficult thing to know.
Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job!
At Alexa Appraisal (703) 425-2581, we're experts at determining value trends in Fairfax Station, Fairfax County, and surrounding areas, and we know when property values have risen or declined.
When faced with figures from an appraiser, the mortgage company will usually cancel the PMI with little effort. At which time, the home owner can retain the savings from that point on.
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Does your monthly house payment have a lineitem for PMI? Call Alexa Appraisal (703) 425-2581 today at 703-425-2581 or send us an e-mail. A current appraisal could save you thousands.
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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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