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Mike Noble Appraisals can help you remove your Private Mortgage Insurance
When getting a mortgage, a 20% down payment is usually the standard.
Considering the liability for the lender is generally only the difference between the home value and the amount remaining on the loan, the 20% provides a nice buffer against the charges of foreclosure, reselling the home, and regular value variations in the event a borrower doesn't pay.
The market was taking down payments discounted to 10, 5 and often 0 percent in the peak of last decade's mortgage boom.
A lender is able to endure the added risk of the minimal down payment with Private Mortgage Insurance or PMI.
PMI takes care of the lender in case a borrower doesn't pay on the loan and the market price of the home is lower than the balance of the loan.
Because 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.
It's beneficial for the lender because they acquire the money, and they get paid if the borrower is unable to pay, different from a piggyback loan where the lender takes in all the losses.
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Has your home value appreciated since you first purchased? Contact Mike Noble Appraisals today at (334) 799-6978 to see if you can cancel your Private Mortgage Insurance payment.
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How can home buyers prevent bearing the expense of PMI?
With the implementation of The Homeowners Protection Act of 1998, lenders are required to automatically terminate the PMI when the principal balance of the loan reaches 78 percent of the primary loan amount on nearly all loans.
Wise homeowners can get off the hook a little early. The law guarantees that, at the request of the homeowner, the PMI must be abandoned when the principal amount equals only 80 percent.
Considering it can take many years to reach the point where the principal is just 80% of the original amount of the loan, it's important to know how your Alabama home has appreciated in value.
After all, every bit of appreciation you've obtained over time counts towards removing PMI. So why should you pay it after the balance of your loan has dropped below the 80% threshold?
Even when nationwide trends predict falling home values, be aware that real estate is local. Your neighborhood might not be heeding the national trends and/or your home might have secured equity before things simmered down.
An accredited, Alabama 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 is an appraiser's job to keep up with the market dynamics of their area.
At Mike Noble Appraisals, we know when property values have risen or declined. We're experts at identifying value trends in Montgomery, Elmore County, and surrounding areas.
Faced with information from an appraiser, the mortgage company will usually eliminate the PMI with little anxiety. At which time, the home owner can delight in the savings from that point on.
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The money you keep from dropping the PMI required when you got your mortgage pays for the appraisal in no time. Mike Noble Appraisals is in the business of tracking real estate value trends in Montgomery and Elmore County. Contact us today.
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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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