Let Tortorella Appraisals, Inc. help you learn if you can get rid of your PMIA 20% down payment is usually the standard when purchasing a home. Because 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 costs of foreclosure, reselling the home, and typical value changesin the event a borrower defaults. The market was accepting down payments down to 10, 5 and often 0 percent during the mortgage boom of the last decade. How does a lender endure the added risk of the low down payment? The answer is Private Mortgage Insurance or PMI. This additional plan takes care of the lender in the event a borrower doesn't pay on the loan and the worth of the home is lower than what is owed on the loan. Because the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and frequently isn't even tax deductible, PMI is pricey to a borrower. Contradictory to a piggyback loan where the lender takes in all the deficits, PMI is lucrative for the lender because they acquire the money, and they get paid if the borrower is unable to pay. ![]() Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How home buyers can keep from bearing the cost of PMIThe Homeowners Protection Act of 1998 forces the lenders on most loans to automatically terminate the PMI when the principal balance of the loan reaches 78 percent of the initial loan amount. Smart home owners can get off the hook sooner than expected. The law designates that, at the request of the homeowner, the PMI must be released when the principal amount reaches just 80 percent. Considering it can take many years to arrive at the point where the principal is just 20% of the initial amount of the loan, it's necessary to know how your home has grown in value. After all, all of the appreciation you've gained over time counts towards abolishing PMI. So why should you pay it after your loan balance has dropped below the 80% threshold? Your neighborhood may not be minding the national trends and/or your home may have secured equity before things calmed down, so even when nationwide trends predict plunging home values, you should understand that real estate is local. An accredited, licensed real estate appraiser can help homeowners understand just when their home's equity goes over the 20% point, as it's a difficult thing to know. As appraisers, it's our job to know the market dynamics of our area. At Tortorella Appraisals, Inc., we know when property values have risen or declined. We're experts at pinpointing value trends in Kingston, Ulster County and surrounding areas. When faced with information from an appraiser, the mortgage company will most often drop the PMI with little trouble. At which time, the homeowner can delight in the savings from that point on.
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