Have equity in your home? Want a lower payment? An appraisal from EXPRESS APPRAISAL GROUP, LLC can help you get rid of your PMI.
A 20% down payment is usually the standard when getting a mortgage. Because the risk for the lender is generally only the difference between the home value and the sum due on the loan, the 20% adds a nice cushion against the costs of foreclosure, reselling the home, and regular value fluctuationson the chance that a borrower is unable to pay.
During the recent mortgage upturn of the mid 2000s, it became common to see lenders requiring down payments of 10, 5 or sometimes 0 percent. How does a lender handle the additional risk of the small down payment? The answer is Private Mortgage Insurance or PMI. This supplementary policy takes care of the lender if a borrower doesn't pay on the loan and the worth of the house is lower than the balance of the loan.
PMI is pricey to a borrower in that the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and often isn't even tax deductible. It's advantageous for the lender because they obtain the money, and they get paid if the borrower defaults, different from a piggyback loan where the lender takes in all the losses.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How can home buyers keep from bearing the cost of PMI?
The Homeowners Protection Act of 1998 makes the lenders on most loans to automatically eliminate the PMI when the principal balance of the loan reaches 78 percent of the original loan amount. Acute home owners can get off the hook ahead of time. The law pledges that, at the request of the homeowner, the PMI must be abandoned when the principal amount equals only 80 percent.
Since it can take many years to arrive at the point where the principal is only 20% of the original loan amount, it's essential to know how your home has grown in value. After all, every bit of appreciation you've accomplished over time counts towards dismissing PMI. So why pay it after your loan balance has fallen below the 80% threshold? Your neighborhood may not be following the national trends and/or your home might have acquired equity before things cooled off, so even when nationwide trends predict plunging home values, you should understand that real estate is local.
A certified, licensed real estate appraiser can help home owners understand just when their home's equity goes over the 20% point, as it's a hard thing to know. It is an appraiser's job to keep up with the market dynamics of their area. At EXPRESS APPRAISAL GROUP, LLC, we know when property values have risen or declined. We're experts at identifying value trends in KINNELON, Morris County and surrounding areas. When faced with information from an appraiser, the mortgage company will usually eliminate the PMI with little effort. At which time, the homeowner can retain the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: