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Watch your value rise - This is how most people are able to eliminate their PMI. Rising house prices during the last five years have allowed a lot of homeowners to see huge increases in the value of their property. If a buyer bought a home for $100,000 and borrowed $90,000, the house is financed for 90% of its value and the buyer will have to purchase PMI. But if that house increases in value through market fluctuation to $120,000, the mortgage now represents only 75% of the value of the home. The buyer can request that the lender drop the PMI.
Lenders do not have to drop PMI upon a buyer’s request, but most of them will. They won’t just do it when asked, however, they will want proof of value of the property. This means that the homeowner will have to pay for a professional appraisal in order to verify that the property is worth enough for the lender to justify dropping the mortgage insurance. Appraisals usually cost $300-500, depending on the market. Unless you are likely to move within a year and sell the house, the cost of the appraisal is more than justified by ultimately dropping the monthly PMI charges.
Given that most buyers today are putting small down payments on their property, and sometimes none at all, PMI is a staple of home lending. But that doesn’t mean that buyers have to pay this dreaded fee forever. All you have to do is ride on the inflation train and keep an eye on your home’s value. Once it reaches a suitable point, you can hire an appraiser and put that extra PMI money to some other use.
If you have a home loan with a high interest rate, you may wish to think about refinancing your mortgage. You may consolidate your debt and lower your monthly mortgage payments. Ameriquest Mortgage can arrange for you to refinance now..
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