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Desert Sky Appraisers can help you remove your Private Mortgage Insurance
It's widely inferred that a 20% down payment is the standard when getting a mortgage.
Since the risk for the lender is usually only the remainder between the home value and the amount outstanding on the loan, the 20% provides a nice cushion against the expenses of foreclosure, selling the home again, and regular value fluctuations on the chance that a purchaser doesn't pay.
During the recent mortgage upturn of the mid 2000s, it became widespread to see lenders reducing down payments to 10, 5 or sometimes 0 percent.
A lender is able to handle the added risk of the reduced down payment with Private Mortgage Insurance or PMI.
This supplemental plan guards the lender in case a borrower is unable to pay on the loan and the value of the house is less than the loan balance.
Because the $40-$50 a month per $100,000 borrowed is lumped into the mortgage monthly payment and oftentimes isn't even tax deductible, PMI can be pricey to a borrower.
Separate from a piggyback loan where the lender consumes all the costs, PMI is money-making for the lender because they acquire the money, and they get paid if the borrower doesn't pay.
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Did you secure your mortgage with less than 20% down? Contact Desert Sky Appraisers today at 480-361-9493 to see if you can save money by removing your Private Mortgage Insurance premium.
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How can a homebuyer refrain from bearing the expense of PMI?
With the passage of The Homeowners Protection Act of 1998, lenders are forced to automatically cancel the PMI when the principal balance of the loan reaches 78 percent of the original loan amount on nearly all loans.
The law promises that, at the request of the home owner, the PMI must be released when the principal amount equals only 80 percent. So, smart homeowners can get off the hook a little early.
It can take a significant number of years to reach the point where the principal is just 80% of the original loan amount, so it's crucial to know how your Arizona home has increased in value.
After all, every bit of appreciation you've accomplished over the years counts towards dismissing PMI. So why should you pay it after the balance of your loan has fallen below the 80% threshold?
Your neighborhood might not adhere to national trends and/or your home could have acquired equity before things cooled off. So even when nationwide trends hint at a reduction in home values, you should realize that real estate is local.
An accredited, Arizona licensed real estate appraiser can help home owners figure out if their equity has made it to the 20% point, as it's a tough thing to know.
As appraisers, it's our job to know the market dynamics of our area.
At Desert Sky Appraisers, we're experts at determining value trends in Chandler, Maricopa County, and surrounding areas, and we know when property values have risen or declined.
Faced with data from an appraiser, the mortgage company will most often eliminate the PMI with little anxiety. At that time, the homeowner can enjoy the savings from that point on.
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Has your home value appreciated since you first purchased? Call Desert Sky Appraisers today at 480-361-9493. You may be able to save money by removing your Private Mortgage Insurance premium.
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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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