Let Carrie Luckner-Zimmerman help you figure out if you can eliminate your PMIWhen getting a mortgage, a 20% down payment is usually the standard. Since the risk for the lender is generally only the difference between the home value and the amount remaining on the loan, the 20% supplies a nice cushion against the charges of foreclosure, selling the home again, and natural value fluctuationsin the event a purchaser doesn't pay. During the recent mortgage upturn of the last decade, it became common to see lenders commanding down payments of 10, 5 or even 0 percent. How does a lender manage the added risk of the low down payment? The solution is Private Mortgage Insurance or PMI. This supplementary plan takes care of the lender if a borrower is unable to pay on the loan and the worth of the property is lower than the loan balance. PMI is costly to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is rolled into the mortgage payment and oftentimes isn't even tax deductible. It's lucrative for the lender because they obtain the money, and they get paid if the borrower is unable to pay, contradictory to a piggyback loan where the lender takes in all the damages. 
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How can a homeowner prevent bearing the cost of PMI?The Homeowners Protection Act of 1998 requires the lenders on most loans to automatically terminate the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount. The law promises that, upon request of the home owner, the PMI must be dropped when the principal amount reaches just 80 percent. So, savvy homeowners can get off the hook a little early. It can take countless years to get to the point where the principal is only 20% of the initial amount borrowed, so it's crucial to know how your home has grown in value. After all, all of the appreciation you've achieved 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 may not be adhering to the national trends and/or your home could have secured equity before things simmered down, so even when nationwide trends indicate falling home values, you should realize that real estate is local. The difficult thing for most home owners to understand is just when their home's equity rises above the 20% point. A certified, licensed real estate appraiser can surely help. It's an appraiser's job to understand the market dynamics of their area. At Carrie Luckner-Zimmerman, we're experts at determining value trends in Great Neck, Nassau County and surrounding areas, and we know when property values have risen or declined. Faced with figures from an appraiser, the mortgage company will often drop the PMI with little anxiety. At which time, the homeowner can enjoy the savings from that point on.
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