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State DirectoryEnslen Appraisal Service
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"Let's bring in the expert and make sure we're not spending too much on this property."
- HoursOPEN NOW
- Regular Hours:
Mon - Fri - Phone:
Main - 334-221-0448
- Address:
- 6031 Perimeter Pl Montgomery, AL 36116
- Email:
- Link:
- Categories
- Real Estate Appraisers, Appraisers
General Info
When purchasing a home, a 20% down payment is typically the standard. The lender's only liability is often just the remainder between the home value and the balance remaining on the loan, so the 20% adds a nice cushion against the costs of foreclosure, selling the home again, and natural value fluctuations in the event a purchaser doesn't pay. During the recent mortgage boom of the last decade, it became common to see lenders reducing down payments to 10, 5, 3 or sometimes 0 percent. A lender is able to handle the additional risk of the small down payment with Private Mortgage Insurance or PMI. PMI guards the lender in the event a borrower doesn't pay on the loan and the market price of the house is lower than what is owed on the loan. PMI can be pricey to a borrower in that the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and frequently isn't even tax deductible. Different from a piggyback loan where the lender absorbs all the deficits, PMI is money-making for the lender because they acquire the money, and they receive payment if the borrower defaults.