Have equity in your home? Want a lower payment? An appraisal from Zaloom Appraisal Associates, Ltd. can help you get rid of your PMI.It's widely known that a 20% down payment is the standard when getting a mortgage. Considering the risk for the lender is often only the remainder between the home value and the sum due on the loan, the 20% adds a nice buffer against the charges of foreclosure, selling the home again, and regular value variations on the chance that a borrower defaults.During the recent mortgage boom of the mid 2000s, it became common to see lenders only asking for down payments of 10, 5 or often 0 percent. A lender is able to manage the additional risk of the reduced down payment with Private Mortgage Insurance or PMI. This added policy covers the lender in case a borrower defaults on the loan and the market price of the house is less than what is owed on the loan. Since the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and many times isn't even tax deductible, PMI can be pricey to a borrower. It's favorable for the lender because they acquire the money, and they are covered if the borrower is unable to pay, as opposed to a piggyback loan where the lender takes in all the costs.
How can a home buyer refrain from bearing the expense of PMI?With the implementation of The Homeowners Protection Act of 1998, lenders are forced to automatically stop the PMI when the principal balance of the loan equals 78 percent of the initial loan amount on nearly all loans. Savvy home owners can get off the hook ahead of time. The law promises that, at the request of the homeowner, the PMI must be released when the principal amount equals only 80 percent.It can take a significant number of years to arrive at the point where the principal is only 80% of the original amount of the loan, so it's important to know how your New York home has appreciated in value. After all, any appreciation you've gained over time counts towards abolishing PMI. So why should you pay it after the balance of your loan has fallen below the 80% threshold? Even when nationwide trends hint at falling home values, understand that real estate is local. Your neighborhood might not be adopting the national trends and/or your home might have secured equity before things cooled off. A certified, New York licensed real estate appraiser can help homeowners figure out just when their home's equity rises above the 20% point, as it's a tough thing to know. It is an appraiser's job to keep up with the market dynamics of their area. At Zaloom Appraisal Associates, Ltd., we know when property values have risen or declined. We're masters at recognizing value trends in Staten Island, Richmond County, and surrounding areas. Faced with data from an appraiser, the mortgage company will most often remove the PMI with little effort. At which time, the homeowner can relish 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
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