Have equity in your home? Want a lower payment? An appraisal from Eagle Appraisals Inc can help you get rid of your PMI.A 20% down payment is usually the standard when purchasing a home. The lender's only risk is usually just the difference between the home value and the balance due on the loan, so the 20% adds a nice buffer against the costs of foreclosure, selling the home again, and regular value fluctuations in the event a purchaser is unable to pay.Lenders were taking down payments dropping to 10, 5 and frequently 0 percent in the peak of last decade's mortgage boom. How does a lender manage the added risk of the small down payment? The answer is Private Mortgage Insurance or PMI. This supplemental policy protects the lender in the event a borrower defaults on the loan and the market price of the home is less than what is owed on the loan. Since the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and frequently isn't even tax deductible, PMI is costly to a borrower. Instead of a piggyback loan where the lender consumes all the deficits, PMI is beneficial for the lender because they secure the money, and they get paid if the borrower defaults.
How can home owners refrain from bearing the expense of PMI?With the passage of The Homeowners Protection Act of 1998, lenders are obligated to automatically cease the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount on most loans. Keen home owners can get off the hook a little early. The law designates that, at the request of the home owner, the PMI must be released when the principal amount reaches just 80 percent.It can take several years to reach the point where the principal is just 80% of the original loan amount, so it's necessary to know how your New York home has appreciated in value. After all, every bit of appreciation you've acquired over time counts towards removing PMI. So why pay it after the balance of your loan has fallen below the 80% mark? Even when nationwide trends forecast falling home values, realize that real estate is local. Your neighborhood might not be heeding the national trends and/or your home might have gained equity before things cooled off. A certified, New York licensed real estate appraiser can help home owners figure out if their equity has exceeed the 20% point, as it's a tough thing to know. As appraisers, it's our job to keep up with the market dynamics of our area. At Eagle Appraisals Inc, we're experts at pinpointing value trends in Riverhead, Suffolk County, and surrounding areas, and we know when property values have risen or declined. Faced with information from an appraiser, the mortgage company will usually cancel the PMI with little effort. 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: Cancellation of Private Mortgage Insurance: Federal Law May Save You Hundreds of Dollars Each Year
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