|
|
P.M. Appraisals, Inc. can help you remove your Private Mortgage Insurance
When purchasing a home, a 20% down payment is usually the standard.
The lender's risk is oftentimes only the difference between the home value and the balance due on the loan, so the 20% adds a nice cushion against the expenses of foreclosure, selling the home again, and regular value variations in the event a purchaser doesn't pay.
During the recent mortgage upturn of the mid 2000s, it was customary to see lenders reducing down payments to 10, 5, 3 or even 0 percent.
How does a lender endure the additional risk of the small down payment? The answer is Private Mortgage Insurance or PMI.
PMI guards the lender in case a borrower doesn't pay on the loan and the market price of the home is lower than what the borrower still owes on the loan.
PMI is pricey to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and on many occasions isn't even tax deductible.
Unlike a piggyback loan where the lender absorbs all the losses, PMI is favorable for the lender because they obtain the money, and they receive payment if the borrower doesn't pay.
 |
 |
 |
Did you secure your mortgage with less than 20% down? Contact P.M. Appraisals, Inc. today at 631-321-6678. You may be able to cancel your Private Mortgage Insurance premium.
|
|
|
How can home buyers prevent bearing the cost of PMI?
The Homeowners Protection Act of 1998 obligates the lenders on nearly all loans to automatically stop the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount.
Wise home owners can get off the hook beforehand. The law promises that, upon request of the home owner, the PMI must be released when the principal amount reaches only 80 percent.
Since it can take several years to reach the point where the principal is just 80% of the original amount borrowed, it's essential to know how your New York home has increased in value.
After all, any appreciation you've accomplished over the years counts towards abolishing PMI. So why pay it after the balance of your loan has dropped below the 80% threshold?
Even when nationwide trends indicate decreasing home values, be aware that real estate is local. Your neighborhood might not be heeding the national trends and/or your home might have acquired equity before things cooled off.
A certified, New York licensed real estate appraiser can help homeowners figure out if their equity has reached the 20% point, as it's a difficult thing to know.
Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job!
At P.M. Appraisals, Inc., we're masters at identifying value trends in Babylon, Suffolk 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 effort. At that time, the home owner can relish the savings from that point on.
|
|
|
The money you keep from cancelling your PMI will make up for the cost of the appraisal in a matter of months. P.M. Appraisals, Inc. is in the business of tracking real estate value trends in Babylon and Suffolk County. Contact us today.
|
|
|
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
|
|
