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Let Northern Arizona Appraisal, Inc. help you learn if you can cancel your PMI
When purchasing a home, a 20% down payment is typically the standard.
Considering the liability for the lender is generally only the remainder between the home value and the sum due on the loan, the 20% supplies a nice cushion against the charges of foreclosure, reselling the home, and regular value fluctuations on the chance that a borrower is unable to pay.
During the recent mortgage boom of the mid 2000s, it was widespread to see lenders only asking for down payments of 10, 5, 3 or often 0 percent.
How does a lender manage the additional risk of the low down payment? The solution is Private Mortgage Insurance or PMI.
This supplementary plan guards the lender if a borrower is unable to pay on the loan and the value of the house is less than the balance of the loan.
Because the $40-$50 a month per $100,000 borrowed is lumped into the mortgage monthly payment and on many occasions isn't even tax deductible, PMI can be pricey to a borrower.
It's beneficial for the lender because they acquire the money, and they get the money if the borrower doesn't pay, separate from a piggyback loan where the lender consumes all the damages.
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The money you keep from cancelling your PMI will make up for the cost of the appraisal in a matter of months. Nobody is more qualified than Northern Arizona Appraisal, Inc. when it comes to appreciating values in the city of Phoenix and Maricopa County. Contact us today.
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How can a buyer refrain from bearing the expense of PMI?
The Homeowners Protection Act of 1998 forces the lenders on most loans to automatically stop the PMI when the principal balance of the loan reaches 78 percent of the original loan amount.
The law stipulates that, upon request of the home owner, the PMI must be abandoned when the principal amount reaches just 80 percent. So, savvy home owners can get off the hook ahead of time.
Considering it can take several years to arrive at the point where the principal is only 80% of the original amount borrowed, it's essential to know how your Arizona home has grown in value.
After all, all of the appreciation you've acquired over the years counts towards abolishing PMI. So why should you pay it after your loan balance has dropped below the 80% mark?
Even when nationwide trends forecast lower overall home values, be aware that real estate is local. Your neighborhood might not be minding the national trends and/or your home could have secured equity before things cooled off.
An accredited, Arizona 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.
It is an appraiser's job to recognize the market dynamics of their area.
At Northern Arizona Appraisal, Inc., we're masters at pinpointing value trends in Phoenix, Maricopa County, and surrounding areas, and we know when property values have risen or declined.
When faced with information from an appraiser, the mortgage company will often remove the PMI with little anxiety. At which time, the homeowner can delight in the savings from that point on.
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Has your home value appreciated since you first purchased? Call Northern Arizona Appraisal, Inc. today at 928-856-0888 to see if you can get rid of your Private Mortgage Insurance premium.
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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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