Let GOLD COAST APPRAISAL GROUP help you discover if you can eliminate your PMI
It's generally known that a 20% down payment is common when buying a house.
The lender's only liability is often just the remainder between the home value and the balance remaining on the loan, so the 20% adds a nice buffer against the charges of foreclosure, selling the home again, and natural value variations on the chance that a borrower defaults.
Lenders were taking down payments as low as 10, 5 and often 0 percent during the mortgage boom of the mid 2000s.
A lender is able to manage the additional risk of the small down payment with Private Mortgage Insurance or PMI.
This supplementary plan guards the lender if a borrower is unable to pay on the loan and the value of the home is less than what the borrower still owes on the loan.
PMI is costly to a borrower because the $40-$50 a month per $100,000 borrowed is rolled into the mortgage payment and on many occasions isn't even tax deductible.
Instead of a piggyback loan where the lender takes in all the losses, PMI is lucrative for the lender because they acquire the money, and they are covered if the borrower defaults.
Did you secure your mortgage with less than 20% down? Contact GOLD COAST APPRAISAL GROUP today at 201-675-9122 to see if you can save money by removing your Private Mortgage Insurance payment.
How can a home buyer keep from paying PMI?
The Homeowners Protection Act of 1998 obligates the lenders on nearly all loans to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the primary loan amount.
The law guarantees that, upon request of the homeowner, the PMI must be abandoned when the principal amount equals only 80 percent. So, acute home owners can get off the hook ahead of time.
Because it can take several years to reach the point where the principal is just 80% of the initial amount borrowed, it's necessary to know how your New Jersey home has appreciated in value.
After all, any appreciation you've achieved over the years counts towards dismissing PMI. So why pay it after the balance of your loan has dropped below the 80% threshold?
Your neighborhood might not adhere to national trends and/or your home might have secured equity before things cooled off. So even when nationwide trends forecast decreasing home values, you should know most importantly that real estate is local.
The toughest thing for many consumers to figure out is just when their home's equity goes over the 20% point. A certified, New Jersey licensed real estate appraiser can certainly help.
It's an appraiser's job to recognize the market dynamics of their area.
At GOLD COAST APPRAISAL GROUP, we know when property values have risen or declined. We're masters at recognizing value trends in Cliffside Park, Bergen County, and surrounding areas.
When faced with information from an appraiser, the mortgage company will generally eliminate the PMI with little trouble. At that time, the home owner can delight in the savings from that point on.
The savings from getting rid of your PMI will make up for the price of the appraisal in a matter of months. GOLD COAST APPRAISAL GROUP stays current with real estate value trends in Cliffside Park and Bergen County. Contact us today.
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