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How is Market Value Determined? Home Appraisal vs Home Inspection
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What is PMI? PMI or Private Mortgage Insurance is basically an insurance policy required by the mortgage lender on loans where the total loan amount exceeds 80% of the value of the property. Why do lenders require PMI? Take the example of young couple buying their first home. Both are working and can qualify for a mortgage loan but have limited resources to make a down payment. Fast forward two years or so, the couple have a baby, car payments and credit card bills, the assume one of the spouses loses their job. Since the couple has limited equity (or none at all) they may be more apt to "walk away" from the mortgage. This is where PMI steps in and covers some of the loss incurred by lender. Since Private Mortgage Insurance coverage generally only benefits the lender, it is in your best interest to eliminate this monthly charge. For more information on removing private mortgage insurance coverage see PMI / MIP Removal Savings. Without PMI coverage lenders would refuse or be reluctant to make these "risky" high loan to value ratio loans. The Loan to Value (LTV) Ratio reflects the amount of equity borrowers have in their homes. The LTV ratio is the amount of money you borrow divided by the purchase price or appraised value of the home. Different types of loans have specific LTV limits. |
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Sharon Auffet Appraisal
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501 Magnolia Trail |