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Have equity in your home? Want a lower payment? An appraisal from Winn Appraisal Services can help you get rid of your PMI.
When purchasing a home, a 20% down payment is usually the standard.
The lender's liability is often only the remainder between the home value and the balance due on the loan, so the 20% provides a nice buffer against the costs of foreclosure, reselling the home, and natural value fluctuations in the event a purchaser is unable to pay.
Lenders were taking down payments discounted to 10, 5 and even 0 percent in the peak of last decade's mortgage boom.
A lender is able to manage the increased risk of the low down payment with Private Mortgage Insurance or PMI.
PMI guards the lender in case a borrower defaults on the loan and the market price of the property is less than what is owed on the loan.
PMI is costly to a borrower in that the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and frequently isn't even tax deductible.
It's favorable for the lender because they collect the money, and they get paid if the borrower defaults, separate from a piggyback loan where the lender takes in all the deficits.
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Has your home value appreciated since you first purchased? Contact Winn Appraisal Services today at (503)639-5053. You may be able to save money by removing your Private Mortgage Insurance payment.
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How can homebuyers prevent bearing the expense of PMI?
With the passage of The Homeowners Protection Act of 1998, lenders are obligated to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the original loan amount on most loans.
The law states that, at the request of the home owner, the PMI must be abandoned when the principal amount equals just 80 percent. So, acute homeowners can get off the hook ahead of time.
Considering it can take a significant number of years to arrive at the point where the principal is only 80% of the original amount borrowed, it's crucial to know how your Oregon home has appreciated in value.
After all, all of the appreciation you've accomplished over the years counts towards abolishing PMI. So why should you pay it after your loan balance has dropped below the 80% threshold?
Your neighborhood might not follow national trends and/or your home might have acquired equity before the economy declined. So even when nationwide trends indicate decreasing home values, you should know most importantly that real estate is local.
A certified, Oregon licensed real estate appraiser can help homeowners figure out just when their home's equity goes over 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 Winn Appraisal Services, we know when property values have risen or declined. We're masters at pinpointing value trends in Lake Oswego, Washington County, and surrounding areas.
Faced with information from an appraiser, the mortgage company will usually remove the PMI with little trouble. At which time, the homeowner can enjoy the savings from that point on.
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The amount you keep from dropping your PMI pays for the appraisal in no time. Nobody is more qualified than Winn Appraisal Services when it comes to appreciating values in Lake Oswego and Washington 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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