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Have equity in your home? Want a lower payment? An appraisal from American Realty Appraisals, LLC can help you get rid of your PMI.
When getting a mortgage, a 20% down payment is typically the standard.
The lender's liability is oftentimes only the remainder between the home value and the balance remaining on the loan, so the 20% adds a nice buffer against the costs of foreclosure, selling the home again, and typical value fluctuations in the event a borrower doesn't pay.
Banks were taking down payments as low as 10, 5 and frequently 0 percent in the peak of last decade's mortgage boom.
How does a lender endure the additional risk of the small down payment? The solution is Private Mortgage Insurance or PMI.
This added policy covers the lender in the event a borrower defaults on the loan and the value of the house is lower than the loan balance.
PMI is pricey to a borrower in that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage monthly payment and often isn't even tax deductible.
Separate from a piggyback loan where the lender takes in all the deficits, PMI is profitable for the lender because they obtain the money, and they are covered if the borrower defaults.
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Did you secure your mortgage with less than 20% down? Call American Realty Appraisals, LLC today at (732) 598-9811 to see if you can save money by removing your Private Mortgage Insurance premium.
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How can a buyer avoid bearing the cost of PMI?
The Homeowners Protection Act of 1998 forces the lenders on most loans to automatically stop the PMI when the principal balance of the loan equals 78 percent of the original loan amount.
Smart home owners can get off the hook a little earlier. The law stipulates that, at the request of the home owner, the PMI must be dropped when the principal amount equals just 80 percent.
Considering it can take several years to reach the point where the principal is just 80% of the original amount of the loan, it's crucial to know how your New Jersey home has grown in value.
After all, all of the appreciation you've accomplished over time counts towards dismissing PMI. So why should you pay it after the balance of your loan has dropped below the 80% mark?
Your neighborhood may not conform to national trends and/or your home could have acquired equity before the economy cooled off. So even when nationwide trends predict declining home values, you should understand that real estate is local.
A certified, New Jersey licensed real estate appraiser can help homeowners figure out just when their home's equity rises above the 20% point, as it's a hard thing to know.
As appraisers, it's our job to know the market dynamics of our area.
At American Realty Appraisals, LLC, we know when property values have risen or declined. We're masters at pinpointing value trends in Scotch Plains, Union County, and surrounding areas.
When faced with information from an appraiser, the mortgage company will usually do away with the PMI with little effort. At that time, the homeowner can retain the savings from that point on.
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Did you have less than 20% to put down on your mortgage? Contact American Realty Appraisals, LLC today at (732) 598-9811 to see if you can cancel your Private Mortgage Insurance premium.
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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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