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GEManagement, Ltd. can help you remove your Private Mortgage Insurance
A 20% down payment is typically accepted when purchasing a home.
The lender's risk is often only the remainder between the home value and the balance outstanding on the loan, so the 20% provides a nice cushion against the charges of foreclosure, selling the home again, and regular value fluctuations in the event a borrower doesn't pay.
During the recent mortgage upturn that our country recently experienced, it became widespread to see lenders making deals with down payments of 10, 5 or even 0 percent.
A lender is able to endure the increased risk of the reduced down payment with Private Mortgage Insurance or PMI.
PMI takes care of the lender in the event a borrower doesn't pay on the loan and the value of the property is lower than the loan balance.
Since the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and many times isn't even tax deductible, PMI is pricey to a borrower.
Different from a piggyback loan where the lender takes in all the costs, PMI is money-making for the lender because they collect the money, and they receive payment if the borrower is unable to pay.
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Did you have less than 20% to put down on your mortgage? Contact GEManagement, Ltd. today at (630) 227-9010. You may be able to cancel your Private Mortgage Insurance premium.
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How home buyers can avoid bearing the cost of PMI
As a result of The Homeowners Protection Act of 1998, lenders are forced to automatically cancel the PMI when the principal balance of the loan reaches 78 percent of the primary loan amount on most loans.
The law promises that, at the request of the home owner, the PMI must be dropped when the principal amount reaches only 80 percent. So, acute home owners can get off the hook a little earlier.
It can take a significant number of years to reach the point where the principal is only 80% of the original loan amount, so it's essential to know how your Illinois home has grown in value.
After all, every bit of appreciation you've achieved over the years counts towards removing PMI. So what's the reason for paying it after the balance of your loan has fallen below the 80% threshold?
Even when nationwide trends predict declining home values, realize that real estate is local. Your neighborhood might not be adhering to the national trends and/or your home could have acquired equity before things cooled off.
The difficult thing for many homeowners to figure out is whether their home equity has exceeded the 20% point. A certified, Illinois licensed real estate appraiser can surely help.
It is an appraiser's job to recognize the market dynamics of their area.
At GEManagement, Ltd., we're experts at identifying value trends in Wood Dale, Dupage County, and surrounding areas, and we know when property values have risen or declined.
Faced with figures from an appraiser, the mortgage company will most often eliminate the PMI with little trouble. At that time, the homeowner can delight in the savings from that point on.
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Is PMI a lineitem in your monthly mortgage payment? Call GEManagement, Ltd. today at (630) 227-9010 or send us an e-mail. Documentation of your home's current value 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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