Have equity in your home? Want a lower payment? An appraisal from A. Marvin Appraisals, LLC can help you get rid of your PMI.A 20% down payment is usually accepted when purchasing a home. Considering the risk for the lender is often only the remainder between the home value and the sum due on the loan, the 20% provides a nice buffer against the costs of foreclosure, selling the home again, and typical value fluctuations in the event a purchaser is unable to pay.During the recent mortgage boom of the mid 2000s, it became customary to see lenders reducing down payments to 10, 5 or sometimes 0 percent. How does a lender handle the additional risk of the small down payment? The solution is Private Mortgage Insurance or PMI. PMI covers the lender in case a borrower doesn't pay on the loan and the value of the home is less than the loan balance. PMI can be expensive to a borrower in that the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and often isn't even tax deductible. It's beneficial for the lender because they obtain the money, and they are covered if the borrower doesn't pay, separate from a piggyback loan where the lender consumes all the losses.
How homebuyers can avoid bearing the cost of PMIThe Homeowners Protection Act of 1998 forces the lenders on nearly all loans to automatically cease the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount. The law designates that, upon request of the home owner, the PMI must be dropped when the principal amount equals just 80 percent. So, smart home owners can get off the hook ahead of time.Considering it can take several years to arrive at the point where the principal is only 80% of the original amount of the loan, it's important to know how your New York home has grown in value. After all, all of the appreciation you've acquired over the years counts towards removing PMI. So why should you pay it after the balance of your loan has fallen below the 80% threshold? Your neighborhood might not adhere to national trends and/or your home might have secured equity before the economy simmered down. So even when nationwide trends hint at falling home values, you should understand that real estate is local. A certified, New York licensed real estate appraiser can help home owners figure out if their equity has made it to the 20% point, as it's a hard thing to know. It's an appraiser's job to recognize the market dynamics of their area. At A. Marvin Appraisals, LLC, we know when property values have risen or declined. We're masters at recognizing value trends in Brownville, Jefferson County, and surrounding areas. When faced with data from an appraiser, the mortgage company will most often cancel the PMI with little anxiety. At which time, the home owner can enjoy 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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