Have equity in your home? Want a lower payment? An appraisal from BayCoast Appraisal can help you get rid of your PMI.

When purchasing a home, a 20% down payment is usually the standard. The lender's only risk is often just the difference between the home value and the amount outstanding on the loan, so the 20% supplies a nice buffer against the charges of foreclosure, selling the home again, and typical value fluctuations on the chance that a borrower doesn't pay.

The market was taking down payments dropping to 10, 5 and often 0 percent during the mortgage boom of the last decade. How does a lender handle the additional risk of the low down payment? The answer is Private Mortgage Insurance or PMI. PMI guards the lender in the event a borrower doesn't pay on the loan and the market price of the property is less than the balance of the loan.

PMI can be costly to a borrower in that the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and many times isn't even tax deductible. As opposed to a piggyback loan where the lender absorbs all the losses, PMI is favorable for the lender because they collect the money, and they get paid if the borrower defaults.


The money you keep from dropping the PMI required when you got your mortgage will make up for the cost of the appraisal in no time. BayCoast Appraisal has years of experience with value trends in the city of Fairhaven and Bristol County. Contact us today.

How can buyers keep from bearing the expense of PMI?

With the passage of The Homeowners Protection Act of 1998, lenders are obligated to automatically stop the PMI when the principal balance of the loan equals 78 percent of the initial loan amount on most loans. The law states that, upon request of the home owner, the PMI must be abandoned when the principal amount reaches only 80 percent. So, keen homeowners can get off the hook a little early.

Since it can take several years to get to the point where the principal is only 80% of the original amount borrowed, it's crucial to know how your Massachusetts home has appreciated in value. After all, any appreciation you've gained over time counts towards dismissing PMI. So what's the reason for paying it after the balance of your loan has dropped below the 80% threshold? Even when nationwide trends predict falling home values, be aware that real estate is local. Your neighborhood might not be adopting the national trends and/or your home may have gained equity before things cooled off.

The difficult thing for most consumers to figure out is just when their home's equity goes over the 20% point. An accredited, Massachusetts licensed real estate appraiser can surely help. Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job! At BayCoast Appraisal, we know when property values have risen or declined. We're experts at determining value trends in Fairhaven, Bristol County, and surrounding areas. Faced with information from an appraiser, the mortgage company will most often cancel the PMI with little trouble. At that time, the homeowner can delight in the savings from that point on.


Does your monthly mortgage payment have a lineitem for PMI? Call BayCoast Appraisal today at 774-206-1699 or send us an e-mail. A new appraisal could save you thousands.

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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