Porter Place Appraisals can help you remove your Private Mortgage InsuranceWhen getting a mortgage, a 20% down payment is typically the standard. The lender's risk is usually only the remainder between the home value and the sum remaining on the loan, so the 20% adds a nice cushion against the costs of foreclosure, reselling the home, and natural value variations in the event a borrower doesn't pay. During the recent mortgage upturn of the mid 2000s, it became customary to see lenders taking down payments of 10, 5 or often 0 percent. How does a lender endure the additional risk of the low down payment? The solution is Private Mortgage Insurance or PMI. PMI covers the lender if a borrower defaults on the loan and the value of the home is less than what the borrower still owes on the loan. Because the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and frequently isn't even tax deductible, PMI is pricey to a borrower. It's profitable for the lender because they collect the money, and they receive payment if the borrower doesn't pay, unlike a piggyback loan where the lender takes in all the damages. 
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 nearly all loans to automatically stop the PMI when the principal balance of the loan equals 78 percent of the original loan amount. The law designates that, at the request of the homeowner, the PMI must be abandoned when the principal amount reaches just 80 percent. So, acute home owners can get off the hook ahead of time. Considering it can take many years to reach the point where the principal is just 20% of the initial loan amount, it's necessary to know how your home has appreciated in value. After all, every bit of appreciation you've accomplished over time counts towards dismissing PMI. So what's the reason for paying it after the balance of your loan has dropped below the 80% mark? Even when nationwide trends hint at plummeting home values, be aware that real estate is local. Your neighborhood might not be following the national trends and/or your home might have gained equity before things settled down. The toughest thing for many homeowners to understand is just when their home's equity rises above the 20% point. An accredited, licensed real estate appraiser can definitely help. It is an appraiser's job to understand the market dynamics of their area. At Porter Place Appraisals, we're experts at identifying value trends in Morristown, Morris County and surrounding areas, and we know when property values have risen or declined. Faced with figures from an appraiser, the mortgage company will usually remove the PMI with little effort. At which time, the homeowner can enjoy the savings from that point on.
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