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Kenny G. Adams can help you remove your Private Mortgage InsuranceA 20% down payment is usually accepted when purchasing a home. The lender's only liability is usually just the remainder between the home value and the amount outstanding on the loan, so the 20% provides a nice cushion against the costs of foreclosure, selling the home again, and natural value variations in the event a purchaser doesn't pay.
During the recent mortgage boom of the mid 2000s, it became widespread to see lenders only asking for down payments of 10, 5, 3 or sometimes 0 percent. A lender is able to handle the added risk of the reduced down payment with Private Mortgage Insurance or PMI. This supplementary policy takes care of the lender in case a borrower doesn't pay on the loan and the market price of the house is less than what the borrower still owes on the loan.
PMI can be costly to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and frequently isn't even tax deductible. It's beneficial for the lender because they secure the money, and they get the money if the borrower doesn't pay, as opposed to a piggyback loan where the lender takes in all the deficits.
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Has your real estate appreciated since you first purchased? Contact Kenny G. Adams today at (800) 923-2671 to see if you can save money by removing your Private Mortgage Insurance payment. |
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How can home buyers keep from paying PMI? As a result of The Homeowners Protection Act of 1998, lenders are forced to automatically eliminate the PMI when the principal balance of the loan equals 78 percent of the original loan amount on nearly all loans. Keen home owners can get off the hook beforehand. The law pledges that, upon request of the homeowner, the PMI must be released when the principal amount reaches only 80 percent.
It can take several years to arrive at the point where the principal is only 80% of the initial amount of the loan, so it's necessary to know how your California home has grown in value. After all, every bit of appreciation you've accomplished over time counts towards removing PMI. So why should you pay it after your loan balance has dropped below the 80% threshold? Even when nationwide trends indicate decreasing home values, realize that real estate is local. Your neighborhood might not be adopting the national trends and/or your home could have acquired equity before things declined.
The hardest thing for many consumers to figure out is just when their home's equity goes over the 20% point. An accredited, California licensed real estate appraiser can definitely help. Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job! At Kenny G. Adams, we're experts at pinpointing value trends in Riverside, Los Angeles, and San Bernardino Counties, and surrounding areas, and we know when property values have risen or declined. Faced with information from an appraiser, the mortgage company will often eliminate the PMI with little trouble. At which time, the home owner can relish the savings from that point on.
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Did you secure your mortgage with less than 20% down? Contact Kenny G. Adams today at (800) 923-2671 to see if you can cancel your Private Mortgage Insurance payment. |
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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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