DAS Appraisals can help you remove your Private Mortgage Insurance
When purchasing a home, a 20% down payment is typically the standard. Because the risk for the lender is oftentimes only the remainder between the home value and the amount remaining on the loan, the 20% adds a nice buffer against the expenses of foreclosure, reselling the home, and natural value changesin the event a purchaser is unable to pay.
Banks were taking down payments as low as 10, 5 and often 0 percent in the peak of last decade's mortgage boom. A lender is able to handle the added risk of the minimal down payment with Private Mortgage Insurance or PMI. This added policy covers the lender in the event a borrower is unable to pay on the loan and the worth of the house is less than what the borrower still owes on the loan.
PMI is pricey to a borrower in that the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and frequently isn't even tax deductible. Unlike a piggyback loan where the lender takes in all the deficits, PMI is advantageous for the lender because they obtain the money, and they receive payment 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 home owners can refrain from paying PMI
The Homeowners Protection Act of 1998 requires the lenders on nearly all loans to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount. Keen home owners can get off the hook a little early. The law guarantees that, at the request of the homeowner, the PMI must be abandoned when the principal amount reaches just 80 percent.
It can take many years to get to the point where the principal is just 20% of the original loan amount, so it's important to know how your home has increased in value. After all, all of the appreciation you've acquired over time counts towards removing PMI. So why should you pay it after your loan balance has dropped below the 80% threshold? Even when nationwide trends indicate plunging home values, be aware that real estate is local. Your neighborhood may not be adopting the national trends and/or your home may have acquired equity before things simmered down.
The difficult thing for almost all homeowners to know is just when their home's equity goes over the 20% point. An accredited, licensed real estate appraiser can certainly help. It is an appraiser's job to recognize the market dynamics of their area. At DAS Appraisals, we're masters at recognizing value trends in Hackensack, Rockland County and surrounding areas, and we know when property values have risen or declined. Faced with data from an appraiser, the mortgage company will generally remove the PMI with little trouble. At which time, the homeowner can delight in the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: