Let Josef Realty Services, Inc. help you learn if you can get rid of your PMIIt's widely understood that a 20% down payment is common when buying a house. The lender's liability is generally only the difference between the home value and the sum remaining on the loan, so the 20% supplies a nice cushion against the costs of foreclosure, selling the home again, and typical value fluctuations on the chance that a borrower is unable to pay. The market was working with down payments as low as 10, 5 and even 0 percent during the mortgage boom of the mid 2000s. How does a lender handle the added risk of the low down payment? The solution is Private Mortgage Insurance or PMI. PMI covers the lender if a borrower defaults on the loan and the value of the home is lower than the balance of the loan. Because the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and frequently isn't even tax deductible, PMI can be expensive to a borrower. Unlike a piggyback loan where the lender absorbs all the costs, PMI is profitable for the lender because they obtain the money, and they receive payment if the borrower doesn't pay. 
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How can a home owner refrain from paying PMI?The Homeowners Protection Act of 1998 makes the lenders on nearly all loans to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount. Acute home owners can get off the hook a little earlier. The law guarantees that, upon request of the home owner, the PMI must be dropped when the principal amount reaches only 80 percent. It can take many years to reach the point where the principal is just 20% of the original amount of the loan, so it's essential to know how your home has grown in value. After all, every bit of appreciation you've achieved over the years counts towards abolishing PMI. So what's the reason for paying it after the balance of your loan has dropped below the 80% mark? Your neighborhood might not be following the national trends and/or your home might have gained equity before things cooled off, so even when nationwide trends forecast decreasing home values, you should understand that real estate is local. The hardest thing for most homeowners to know is just when their home's equity goes over the 20% point. A certified, licensed real estate appraiser can certainly help. It's an appraiser's job to understand the market dynamics of their area. At Josef Realty Services, Inc., we're experts at recognizing value trends in SAINT LOUIS, Saint Louis County and surrounding areas, and we know when property values have risen or declined. When faced with data from an appraiser, the mortgage company will often drop the PMI with little effort. At that time, the home owner can delight in the savings from that point on.
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