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Have equity in your home? Want a lower payment? An appraisal from Stanley Michael & Associates can help you get rid of your PMI.
When getting a mortgage, a 20% down payment is usually the standard.
The lender's only liability is often just the remainder between the home value and the balance outstanding on the loan, so the 20% supplies a nice cushion against the charges of foreclosure, selling the home again, and typical value fluctuations in the event a borrower is unable to pay.
The market was working with down payments dropping to 10, 5 and frequently 0 percent in the peak of last decade's mortgage boom.
How does a lender handle the added risk of the low down payment? The answer is Private Mortgage Insurance or PMI.
This supplementary policy covers the lender in the event a borrower doesn't pay on the loan and the market price of the house is less than what is owed on the loan.
PMI can be pricey to a borrower because the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and many times isn't even tax deductible.
Separate from a piggyback loan where the lender consumes all the damages, PMI is beneficial for the lender because they acquire the money, and they get the money if the borrower doesn't pay.
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Did you have less than 20% to put down on your mortgage? Contact Stanley Michael & Associates today at 7187105858 to see if you can cancel your Private Mortgage Insurance premium.
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How can a home buyer keep from bearing the cost of PMI?
The Homeowners Protection Act of 1998 obligates the lenders on the majority of loans to automatically eliminate the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount.
The law stipulates that, upon request of the home owner, the PMI must be dropped when the principal amount equals only 80 percent. So, savvy homeowners can get off the hook ahead of time.
Because it can take several years to get to the point where the principal is just 80% of the original amount borrowed, it's necessary to know how your New York home has increased in value.
After all, every bit of appreciation you've achieved over time counts towards dismissing PMI. So why pay it after your loan balance has fallen below the 80% mark?
Even when nationwide trends hint at decreasing home values, realize that real estate is local. Your neighborhood might not be heeding the national trends and/or your home might have gained equity before things cooled off.
The difficult thing for most people to determine is whether their home equity has exceeded the 20% point. An accredited, New York licensed real estate appraiser can surely help.
Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job!
At Stanley Michael & Associates, we know when property values have risen or declined. We're masters at recognizing value trends in Middle Village, Queens County, and surrounding areas.
When faced with figures from an appraiser, the mortgage company will generally cancel the PMI with little trouble. At which time, the homeowner can relish the savings from that point on.
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Did you secure your mortgage with less than 20% down? Call Stanley Michael & Associates today at 7187105858 to see if you can save money by removing 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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