Let All Access Appraisals help you discover if you can get rid of your PMI

It's generally inferred that a 20% down payment is the standard when buying a house. The lender's liability is usually only the remainder between the home value and the sum due on the loan, so the 20% supplies a nice cushion against the charges of foreclosure, reselling the home, and regular value variations in the event a borrower doesn't pay.

During the recent mortgage upturn of the last decade, it was widespread to see lenders taking down payments of 10, 5 or even 0 percent. A lender is able to manage the increased risk of the small down payment with Private Mortgage Insurance or PMI. This supplemental plan protects the lender in case a borrower defaults on the loan and the market price of the house is less than the balance of the loan.

Because the $40-$50 a month per $100,000 borrowed is lumped into the mortgage monthly payment and many times isn't even tax deductible, PMI can be expensive to a borrower. It's profitable for the lender because they secure the money, and they get the money if the borrower is unable to pay, separate from a piggyback loan where the lender absorbs all the costs.

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

How can home buyers refrain from bearing the cost of PMI?

The Homeowners Protection Act of 1998 forces the lenders on most loans to automatically cease the PMI when the principal balance of the loan equals 78 percent of the primary loan amount. The law designates that, upon request of the homeowner, the PMI must be abandoned when the principal amount equals just 80 percent. So, keen homeowners can get off the hook sooner than expected.

Because it can take many years to reach the point where the principal is only 20% of the original amount borrowed, it's necessary to know how your home has increased in value. After all, every bit of appreciation you've achieved over time counts towards abolishing PMI. So why pay it after your loan balance has dropped below the 80% threshold? Your neighborhood may not be reflecting the national trends and/or your home may have gained equity before things cooled off, so even when nationwide trends forecast falling home values, you should realize that real estate is local.

An accredited, licensed real estate appraiser can help home owners understand just when their home's equity rises above the 20% point, as it's a tough thing to know. As appraisers, it's our job to recognize the market dynamics of our area. At All Access Appraisals, we're masters at recognizing value trends in Drexel Hill, Delaware County and surrounding areas, and we know when property values have risen or declined. When faced with information from an appraiser, the mortgage company will usually do away with the PMI with little trouble. At which time, the homeowner can retain 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