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Have equity in your home? Want a lower payment? An appraisal from Sandcastle Management & Realty can help you get rid of your PMI.A 20% down payment is usually the standard when purchasing a home. Because the liability for the lender is often only the remainder between the home value and the sum remaining on the loan, the 20% provides a nice buffer against the costs of foreclosure, selling the home again, and regular value changes on the chance that a purchaser is unable to pay.
Banks were taking down payments as low as 10, 5 and frequently 0 percent during the mortgage boom of the last decade. A lender is able to endure the additional risk of the reduced down payment with Private Mortgage Insurance or PMI. This supplementary plan takes care of the lender if a borrower doesn't pay on the loan and the value of the property is less than the balance of the loan.
Since the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and on many occasions isn't even tax deductible, PMI is costly to a borrower. It's advantageous for the lender because they acquire the money, and they are covered if the borrower is unable to pay, unlike a piggyback loan where the lender absorbs all the costs.
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Has your real estate appreciated since you first purchased? Call Sandcastle Management & Realty today at 847-509-1522. You may be able to save money by removing your Private Mortgage Insurance premium. |
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How can homebuyers refrain from paying PMI? The Homeowners Protection Act of 1998 obligates the lenders on nearly all loans to automatically terminate the PMI when the principal balance of the loan reaches 78 percent of the original loan amount. Wise homeowners can get off the hook a little early. The law pledges that, upon request of the homeowner, the PMI must be abandoned when the principal amount reaches just 80 percent.
Considering it can take many years to arrive at the point where the principal is just 80% of the initial amount borrowed, it's crucial to know how your Illinois home has appreciated in value. After all, every bit of appreciation you've gained over the years counts towards removing PMI. So why pay it after the balance of your loan has dropped below the 80% mark? Even when nationwide trends hint at decreasing home values, realize that real estate is local. Your neighborhood may not be adhering to the national trends and/or your home may have acquired equity before things cooled off.
A certified, Illinois licensed real estate appraiser can help home owners figure out if their equity has made it to the 20% point, as it's a tough thing to know. As appraisers, it's our job to know the market dynamics of our area. At Sandcastle Management & Realty, we know when property values have risen or declined. We're masters at analyzing value trends in Northbrook, Cook County, and surrounding areas. Faced with figures from an appraiser, the mortgage company will often eliminate the PMI with little trouble. At which time, the homeowner can retain the savings from that point on.
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Does your monthly loan payment include a fee for PMI? Call Sandcastle Management & Realty today at 847-509-1522 or send us an e-mail. A new appraisal could save you thousands. |
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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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