Let Tight & Right Real Estate Valuation help you decide if you can eliminate your PMIWhen purchasing a home, a 20% down payment is usually the standard. Since the risk for the lender is usually only the difference between the home value and the sum due on the loan, the 20% adds a nice cushion against the costs of foreclosure, selling the home again, and typical value fluctuationson the chance that a borrower is unable to pay. During the recent mortgage upturn of the mid 2000s, it was common to see lenders taking down payments of 10, 5 or often 0 percent. A lender is able to endure the increased risk of the small down payment with Private Mortgage Insurance or PMI. This supplementary policy covers the lender in case a borrower is unable to pay on the loan and the value of the house is lower than the loan balance. PMI can be 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 frequently isn't even tax deductible. It's advantageous for the lender because they secure the money, and they receive payment if the borrower doesn't pay, contradictory to a piggyback loan where the lender absorbs all the costs. 
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How homeowners can avoid bearing the cost of PMIWith the utilization of The Homeowners Protection Act of 1998, on nearly all loans lenders are obligated to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the initial loan amount. Savvy home owners can get off the hook beforehand. The law states that, at the request of the homeowner, the PMI must be released when the principal amount equals just 80 percent. Considering it can take many years to arrive at the point where the principal is just 20% of the original amount of the loan, it's important to know how your home has grown in value. After all, any appreciation you've obtained over time counts towards abolishing PMI. So why should you pay it after your loan balance has fallen below the 80% threshold? Your neighborhood might not be adopting the national trends and/or your home could have gained equity before things simmered down, so even when nationwide trends signify decreasing home values, you should realize that real estate is local. An accredited, licensed real estate appraiser can help homeowners understand just when their home's equity rises above the 20% point, as it's a tough thing to know. As appraisers, it's our job to understand the market dynamics of our area. At Tight & Right Real Estate Valuation, we know when property values have risen or declined. We're masters at recognizing value trends in Princeton, Union County and surrounding areas. When faced with figures from an appraiser, the mortgage company will usually eliminate the PMI with little trouble. At which time, the home owner can enjoy the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: |