DAS Appraisals can help you remove your Private Mortgage Insurance
It's largely known that a 20% down payment is accepted when purchasing a home. Because the liability for the lender is often only the remainder between the home value and the sum remaining on the loan, the 20% supplies a nice cushion against the costs of foreclosure, selling the home again, and regular value fluctuationsin the event a borrower doesn't pay.
Lenders were taking down payments down to 10, 5 and often 0 percent in the peak of last decade's mortgage boom. How does a lender manage the additional risk of the low down payment? The answer is Private Mortgage Insurance or PMI. PMI protects the lender if a borrower is unable to pay on the loan and the value of the house is lower than the balance of the loan.
PMI is pricey to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage monthly payment and generally isn't even tax deductible. Contradictory to a piggyback loan where the lender consumes all the damages, PMI is money-making for the lender because they secure the money, and they get paid if the borrower is unable to pay.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How can homebuyers keep from paying PMI?
With the utilization of The Homeowners Protection Act of 1998, on nearly all loans lenders are obligated to automatically stop the PMI when the principal balance of the loan equals 78 percent of the primary loan amount. The law designates that, upon request of the home owner, the PMI must be dropped when the principal amount reaches just 80 percent. So, smart home owners can get off the hook sooner than expected.
Since it can take many years to reach the point where the principal is just 20% of the initial loan amount, it's essential to know how your home has grown in value. After all, every bit of appreciation you've obtained over the years counts towards dismissing PMI. So why pay it after your loan balance has fallen below the 80% mark? Despite the fact that nationwide trends hint at decreasing home values, realize that real estate is local. Your neighborhood might not be following the national trends and/or your home may have gained equity before things calmed down.
The difficult thing for most homeowners to know is just when their home's equity goes over the 20% point. An accredited, licensed real estate appraiser can surely help. It is an appraiser's job to know the market dynamics of their area. At DAS Appraisals, we know when property values have risen or declined. We're experts at identifying value trends in Hackensack, Rockland County and surrounding areas. When faced with information from an appraiser, the mortgage company will most often eliminate the PMI with little trouble. At which time, the homeowner can enjoy the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: