John A Dunlap, LLC. can help you remove your Private Mortgage InsuranceA 20% down payment is typically the standard when buying a house. Since the risk for the lender is usually only the difference between the home value and the sum due on the loan, the 20% adds a nice buffer against the expenses of foreclosure, reselling the home, and typical value fluctuations on the chance that a borrower is unable to pay.The market was taking down payments dropping to 10, 5 and often 0 percent in the peak of last decade's mortgage boom. How does a lender manage the increased risk of the low down payment? The answer is Private Mortgage Insurance or PMI. PMI protects the lender if a borrower defaults on the loan and the value of the property is less than what is owed on the loan. PMI can be costly to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and many times isn't even tax deductible. It's lucrative for the lender because they secure the money, and they are covered if the borrower defaults, separate from a piggyback loan where the lender consumes all the losses.
How can homebuyers prevent bearing the expense of PMI?The Homeowners Protection Act of 1998 obligates the lenders on most loans to automatically terminate the PMI when the principal balance of the loan reaches 78 percent of the original loan amount. Acute homeowners can get off the hook ahead of time. The law pledges that, upon request of the home owner, the PMI must be dropped when the principal amount reaches only 80 percent.Since it can take several years to get to the point where the principal is just 80% of the original amount borrowed, it's important to know how your Virginia home has appreciated in value. After all, any appreciation you've gained over time counts towards dismissing PMI. So what's the reason for paying it after your loan balance has dropped below the 80% threshold? Your neighborhood may not adhere to national trends and/or your home might have secured equity before things simmered down. So even when nationwide trends signify a reduction in home values, you should realize that real estate is local. The toughest thing for many homeowners to figure out is whether their home equity has exceeded the 20% point. A certified, Virginia licensed real estate appraiser can certainly help. It is an appraiser's job to recognize the market dynamics of their area. At John A Dunlap, LLC., we're masters at pinpointing value trends in Virginia Beach, Virginia Beach City County, and surrounding areas, and we know when property values have risen or declined. Faced with figures 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.
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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