Oceanside Appraisal Services, LLC can help you remove your Private Mortgage Insurance

It's widely known that a 20% down payment is the standard when getting a mortgage. Considering the risk for the lender is generally only the difference between the home value and the sum remaining on the loan, the 20% supplies a nice cushion against the charges of foreclosure, selling the home again, and typical value changesin the event a purchaser defaults.

During the recent mortgage upturn of the mid 2000s, it became common to see lenders taking down payments of 10, 5 or sometimes 0 percent. A lender is able to manage the additional risk of the minimal down payment with Private Mortgage Insurance or PMI. PMI guards the lender in the event a borrower defaults on the loan and the worth of the home is less than the loan balance.

Since the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and oftentimes isn't even tax deductible, PMI can be costly to a borrower. Separate from a piggyback loan where the lender takes in all the costs, PMI is favorable for the lender because they obtain the money, and they receive payment if the borrower is unable to pay.

Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.

How can a home buyer avoid paying PMI?

With the employment of The Homeowners Protection Act of 1998, on nearly all loans lenders are required to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount. Smart homeowners can get off the hook beforehand. The law promises that, at the request of the homeowner, the PMI must be abandoned when the principal amount reaches only 80 percent.

Since it can take many years to arrive at the point where the principal is just 20% of the original loan amount, it's important to know how your home has appreciated in value. After all, any appreciation you've acquired over time counts towards removing PMI. So why should you pay it after the balance of your loan has dropped below the 80% mark? Your neighborhood might not be minding the national trends and/or your home could have secured equity before things simmered down, so even when nationwide trends hint at decreasing home values, you should realize that real estate is local.

A certified, licensed real estate appraiser can help home owners understand just when their home's equity goes over the 20% point, as it's a tough thing to know. It is an appraiser's job to understand the market dynamics of their area. At Oceanside Appraisal Services, LLC, we know when property values have risen or declined. We're experts at identifying value trends in Brick, Ocean County and surrounding areas. Faced with information from an appraiser, the mortgage company will most often eliminate the PMI with little trouble. At that time, the home owner can delight in 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