Let CitiWide Appraisal Services Kind & Professional Service help you decide if you can cancel your PMIA 20% down payment is typically the standard when getting a mortgage. Considering the risk 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 costs of foreclosure, reselling the home, and natural value fluctuations in the event a borrower defaults.During the recent mortgage upturn of the mid 2000s, it became widespread to see lenders only asking for down payments of 10, 5, 3 or even 0 percent. 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 if a borrower is unable to pay on the loan and the market price of the home is less than the balance of the loan. Since the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and often isn't even tax deductible, PMI can be expensive to a borrower. It's advantageous for the lender because they obtain the money, and they are covered if the borrower is unable to pay, separate from a piggyback loan where the lender absorbs all the damages.
How homeowners can prevent bearing the expense of PMIWith the implementation of The Homeowners Protection Act of 1998, lenders are obligated to automatically terminate the PMI when the principal balance of the loan reaches 78 percent of the original loan amount on most loans. The law pledges that, upon request of the home owner, the PMI must be dropped when the principal amount reaches just 80 percent. So, keen homeowners can get off the hook a little early.Considering it can take several years to get to the point where the principal is just 80% of the original amount borrowed, it's crucial to know how your New York home has increased in value. After all, all of the appreciation you've accomplished over time counts towards removing PMI. So why pay it after your loan balance has dropped below the 80% mark? Your neighborhood might not adhere to national trends and/or your home may have secured equity before the economy cooled off. So even when nationwide trends predict decreasing home values, you should know most importantly that real estate is local. The hardest thing for many consumers to determine is whether their home equity has exceeded the 20% point. An accredited, New York licensed real estate appraiser can definitely help. Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job! At CitiWide Appraisal Services Kind & Professional Service, we're masters at identifying value trends in Ozone Park, Queens County, and surrounding areas, and we know when property values have risen or declined. Faced with figures from an appraiser, the mortgage company will most often drop the PMI with little effort. 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: Cancellation of Private Mortgage Insurance: Federal Law May Save You Hundreds of Dollars Each Year
|
||||||||||||||||||
