Steve Gleit can help you remove your Private Mortgage InsuranceIt's generally known that a 20% down payment is the standard when purchasing a home. Since the risk for the lender is usually only the difference between the home value and the sum remaining on the loan, the 20% adds a nice buffer against the costs of foreclosure, reselling the home, and regular value variationsin the event a borrower doesn't pay. Banks were working with down payments as low as 10, 5 and often 0 percent in the peak of last decade's mortgage boom. How does a lender endure the increased risk of the small down payment? The answer is Private Mortgage Insurance or PMI. This supplementary policy takes care of the lender in the event a borrower is unable to pay on the loan and the market price of the house is less than the balance of the loan. Because the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and frequently isn't even tax deductible, PMI can be expensive to a borrower. It's advantageous for the lender because they collect the money, and they receive payment if the borrower is unable to pay, unlike a piggyback loan where the lender consumes all the deficits. 
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How can a homeowner avoid bearing the cost of PMI?With the implementation of The Homeowners Protection Act of 1998, on most loans lenders are forced to automatically cancel the PMI when the principal balance of the loan reaches 78 percent of the initial loan amount. The law pledges that, at the request of the homeowner, the PMI must be abandoned when the principal amount equals just 80 percent. So, acute home owners can get off the hook ahead of time. Since it can take many years to reach the point where the principal is just 20% of the initial loan amount, it's necessary to know how your home has grown in value. After all, all of the appreciation you've obtained over time counts towards abolishing PMI. So why pay it after the balance of your loan has dropped below the 80% mark? Even when nationwide trends forecast decreasing home values, be aware 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 calmed down. The hardest thing for many homeowners to understand is just when their home's equity rises above the 20% point. An accredited, licensed real estate appraiser can definitely help. As appraisers, it's our job to know the market dynamics of our area. At Steve Gleit, we know when property values have risen or declined. We're experts at analyzing value trends in Northridge, Los Angeles County and surrounding areas. When faced with data from an appraiser, the mortgage company will usually cancel the PMI with little trouble. At that time, the homeowner can retain the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: |