Have equity in your home? Want a lower payment? An appraisal from Hoyt Appraisal, LLC can help you get rid of your PMI.
It's generally known that a 20% down payment is the standard when buying a house. Considering the liability for the lender is usually only the difference between the home value and the amount outstanding on the loan, the 20% provides a nice buffer against the expenses of foreclosure, selling the home again, and regular value fluctuationson the chance that a borrower defaults.
Banks were accepting down payments down to 10, 5 and often 0 percent in the peak of last decade's mortgage boom. How does a lender handle the added risk of the low down payment? The solution is Private Mortgage Insurance or PMI. PMI protects the lender in case a borrower is unable to pay on the loan and the worth of the home is less than the balance of the loan.
PMI is costly 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. It's lucrative for the lender because they collect the money, and they receive payment if the borrower defaults, contradictory to a piggyback loan where the lender consumes all the deficits.
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?
With the employment of The Homeowners Protection Act of 1998, on nearly all loans lenders are forced to automatically stop the PMI when the principal balance of the loan equals 78 percent of the initial loan amount. The law states that, at the request of the home owner, the PMI must be dropped when the principal amount equals just 80 percent. So, savvy homeowners can get off the hook ahead of time.
It can take countless years to get to the point where the principal is only 20% of the original loan amount, so it's crucial to know how your home has appreciated in value. After all, all of the appreciation you've acquired over the years counts towards abolishing PMI. So why pay it after your loan balance has fallen below the 80% threshold? Even when nationwide trends signify plummeting home values, be aware that real estate is local. Your neighborhood may not be adopting the national trends and/or your home could have secured equity before things simmered down.
The toughest thing for almost all home owners to know is just when their home's equity rises above the 20% point. A certified, licensed real estate appraiser can definitely help. As appraisers, it's our job to know the market dynamics of our area. At Hoyt Appraisal, LLC, we're masters at identifying value trends in Oak Ridge, Morris County and surrounding areas, and we know when property values have risen or declined. When faced with figures from an appraiser, the mortgage company will often remove the PMI with little anxiety. At that 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: