Have equity in your home? Want a lower payment? An appraisal from Regional Real Estate Appraisal Service - John Callanan can help you get rid of your PMI.PMI REMOVAL requires a 20% down payment is usually the standard when buying a house. The lender's liability is generally only the difference between the home value and the amount remaining on the loan, so the 20% provides a nice cushion against the costs of foreclosure, reselling the home, and typical value changes in the event a purchaser is unable to pay.
During the recent mortgage boom that our country recently experienced, it became customary to see lenders making deals with down payments of 10, 5, 3 or often 0 percent. How does a lender manage the increased risk of the low down payment? The solution is Private Mortgage Insurance or PMI. This added policy takes care of the lender in case a borrower defaults on the loan and the value of the house is less than the balance of the loan.
Because the $40-$50 a month per $100,000 borrowed is rolled into the mortgage payment and oftentimes isn't even tax deductible, PMI can be costly to a borrower. It's advantageous for the lender because they acquire the money, and they are covered if the borrower defaults, as opposed to a piggyback loan where the lender consumes all the costs.
How can home buyers prevent bearing the expense of PMI?The Homeowners Protection Act of 1998 requires the lenders on the majority of loans to automatically stop the PMI when the principal balance of the loan equals 78 percent of the primary loan amount. Acute home owners can get off the hook ahead of time. The law designates that, upon request of the homeowner, the PMI must be dropped when the principal amount reaches just 80 percent.
Considering it can take a significant number of years to get to the point where the principal is only 80% of the original amount of the loan, it's necessary to know how your New York home has appreciated in value. After all, all of the appreciation you've achieved over the years counts towards dismissing PMI. So why pay it after the balance of your loan has dropped below the 80% mark? Even when nationwide trends hint at decreasing home values, be aware that real estate is local. Your neighborhood might not be adhering to the national trends and/or your home might have gained equity before things cooled off.
An accredited, New York licensed real estate appraiser can help home owners figure out just when their home's equity rises above the 20% point, as it's a hard thing to know. As appraisers, it's our job to keep up with the market dynamics of our area. At Regional Real Estate Appraisal Service LTD., we know when property values have risen or declined. We're experts at analyzing value trends in New City, Rockland County, and surrounding areas. Faced with data from an appraiser, the mortgage company will often drop 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: