Have equity in your home? Want a lower payment? An appraisal from Lattimore & Associates can help you get rid of your PMI.A 20% down payment is usually the standard when getting a mortgage. Since the liability for the lender is oftentimes only the remainder between the home value and the sum due on the loan, the 20% supplies a nice cushion against the charges of foreclosure, reselling the home, and regular value changes in the event a borrower is unable to pay.During the recent mortgage upturn that our country recently experienced, it was widespread to see lenders only asking for down payments of 10, 5, 3 or often 0 percent. A lender is able to handle the added risk of the minimal down payment with Private Mortgage Insurance or PMI. PMI protects the lender if a borrower is unable to pay on the loan and the value of the property is lower than what is owed on the loan. Since the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and many times isn't even tax deductible, PMI can be expensive to a borrower. It's money-making for the lender because they acquire the money, and they receive payment if the borrower is unable to pay, separate from a piggyback loan where the lender consumes all the deficits.
How home owners can refrain from bearing the cost of PMIThe Homeowners Protection Act of 1998 forces the lenders on nearly all loans to automatically eliminate the PMI when the principal balance of the loan reaches 78 percent of the initial loan amount. The law promises that, at the request of the homeowner, the PMI must be abandoned when the principal amount reaches only 80 percent. So, acute homeowners can get off the hook a little early.Since it can take many years to get to the point where the principal is just 80% of the initial amount of the loan, it's crucial to know how your Louisiana home has grown in value. After all, all of the appreciation you've gained over the years counts towards abolishing PMI. So why should you pay it after your loan balance has dropped below the 80% mark? Even when nationwide trends signify decreasing home values, understand that real estate is local. Your neighborhood might not be following the national trends and/or your home may have gained equity before things cooled off. An accredited, Louisiana licensed real estate appraiser can help home owners figure out if their equity has reached the 20% point, as it's a tough thing to know. Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job! At Lattimore & Associates, we know when property values have risen or declined. We're experts at analyzing value trends in New Orleans , County, and surrounding areas. When faced with data from an appraiser, the mortgage company will generally cancel the PMI with little trouble. At which time, the home owner can relish 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
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