Have equity in your home? Want a lower payment? An appraisal from BLS Appraisals, LLC can help you get rid of your PMI.It's largely known that a 20% down payment is common when buying a house. The lender's risk is often only the difference between the home value and the amount remaining on the loan, so the 20% supplies a nice buffer against the charges of foreclosure, reselling the home, and typical value variations in the event a purchaser is unable to pay.Lenders were working with down payments dropping to 10, 5 and frequently 0 percent during the mortgage boom of the last decade. A lender is able to manage the added risk of the low down payment with Private Mortgage Insurance or PMI. This supplementary plan guards the lender if a borrower is unable to pay on the loan and the value of the home is lower 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 profitable for the lender because they acquire the money, and they receive payment if the borrower doesn't pay, in contrast to a piggyback loan where the lender absorbs all the losses.
How can home buyers avoid paying PMI?With the passage of The Homeowners Protection Act of 1998, lenders are forced to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the original loan amount on nearly all loans. Keen homeowners can get off the hook ahead of time. The law states that, at the request of the homeowner, the PMI must be released when the principal amount equals just 80 percent.Since it can take a significant number of years to arrive at the point where the principal is just 80% of the initial loan amount, it's crucial to know how your South Carolina home has appreciated in value. After all, every bit of appreciation you've accomplished over time counts towards removing PMI. So why should you pay it after your loan balance has fallen below the 80% threshold? Even when nationwide trends hint at declining home values, understand that real estate is local. Your neighborhood might not be adhering to the national trends and/or your home may have gained equity before things simmered down. The hardest thing for many people to figure out is just when their home's equity goes over the 20% point. A certified, South Carolina licensed real estate appraiser can certainly help. As appraisers, it's our job to recognize the market dynamics of our area. At BLS Appraisals, LLC, we're experts at pinpointing value trends in Charleston, Berkeley County, and surrounding areas, and we know when property values have risen or declined. Faced with data from an appraiser, the mortgage company will usually drop the PMI with little anxiety. 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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