APPRAISAL EXPRESS, INC can help you remove your Private Mortgage Insurance

It's largely inferred that a 20% down payment is accepted when getting a mortgage. The lender's liability is usually only the difference between the home value and the sum due on the loan, so the 20% provides a nice buffer against the charges of foreclosure, selling the home again, and natural value variations on the chance that a borrower doesn't pay.

During the recent mortgage upturn of the mid 2000s, it became customary to see lenders taking down payments of 10, 5 or sometimes 0 percent. How does a lender endure the additional risk of the small down payment? The answer is Private Mortgage Insurance or PMI. PMI guards the lender if a borrower doesn't pay on the loan and the market price of the home 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 bundled into the mortgage payment and often isn't even tax deductible. Different from a piggyback loan where the lender takes in all the costs, PMI is beneficial for the lender because they secure the money, and they get the money if the borrower defaults.

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

How can a homeowner avoid bearing the cost of PMI?

With the utilization of The Homeowners Protection Act of 1998, on nearly all loans lenders are required to automatically eliminate the PMI when the principal balance of the loan equals 78 percent of the initial loan amount. Keen home owners can get off the hook a little earlier. The law stipulates that, upon request of the homeowner, the PMI must be released when the principal amount equals only 80 percent.

Considering it can take many years to get to the point where the principal is just 20% of the initial amount of the loan, it's crucial to know how your home has increased in value. After all, all of the appreciation you've acquired over time counts towards dismissing PMI. So why pay it after your loan balance has fallen below the 80% threshold? Your neighborhood might not be heeding the national trends and/or your home could have gained equity before things calmed down, so even when nationwide trends signify plunging home values, you should understand that real estate is local.

The difficult thing for many homeowners to know is just when their home's equity rises above the 20% point. An accredited, licensed real estate appraiser can definitely help. It's an appraiser's job to understand the market dynamics of their area. At APPRAISAL EXPRESS, INC, we're experts at determining value trends in Durango, La Plata 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 eliminate the PMI with little anxiety. At which time, the home owner can enjoy 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