Porter Place Appraisals can help you remove your Private Mortgage InsuranceWhen getting a mortgage, a 20% down payment is typically the standard. Considering the liability for the lender is usually only the remainder between the home value and the amount outstanding on the loan, the 20% supplies a nice cushion against the expenses of foreclosure, selling the home again, and regular value fluctuationsin the event a borrower is unable to pay. During the recent mortgage boom of the last decade, it became widespread to see lenders taking down payments of 10, 5 or even 0 percent. How does a lender manage the additional risk of the small down payment? The answer is Private Mortgage Insurance or PMI. PMI takes care of the lender in case a borrower defaults on the loan and the market price of the property is less than what is owed on the loan. PMI can be expensive to a borrower because the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and oftentimes isn't even tax deductible. Different from a piggyback loan where the lender consumes all the damages, PMI is advantageous for the lender because they acquire the money, and they get the money if the borrower defaults. 
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How can a buyer refrain from paying PMI?With the employment of The Homeowners Protection Act of 1998, on most loans lenders are required to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount. Acute home owners can get off the hook sooner than expected. The law promises that, upon request of the home owner, the PMI must be dropped when the principal amount reaches just 80 percent. It can take many years to arrive at the point where the principal is just 20% of the original loan amount, so it's essential to know how your home has appreciated in value. After all, every bit of appreciation you've gained over time counts towards removing PMI. So why pay it after the balance of your loan has dropped below the 80% mark? Despite the fact that nationwide trends forecast plummeting home values, realize that real estate is local. Your neighborhood may not be following the national trends and/or your home could have gained equity before things calmed down. 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 understand the market dynamics of our area. At Porter Place Appraisals, we know when property values have risen or declined. We're experts at identifying value trends in Morristown, Morris County and surrounding areas. Faced with information from an appraiser, the mortgage company will generally cancel the PMI with little effort. At which time, the homeowner can retain the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: |