Appraisals Plus can help you remove your Private Mortgage Insurance

It's typically understood that a 20% down payment is common when buying a house. Because the liability for the lender is oftentimes only the difference between the home value and the amount outstanding on the loan, the 20% supplies a nice buffer against the charges of foreclosure, selling the home again, and natural value variationson the chance that a borrower defaults.

Banks were working with down payments as low as 10, 5 and even 0 percent during the mortgage boom of the last decade. A lender is able to handle the added risk of the reduced down payment with Private Mortgage Insurance or PMI. PMI covers the lender in the event a borrower defaults on the loan and the worth of the home is less than the balance of the loan.

Because the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and often isn't even tax deductible, PMI is costly to a borrower. Contradictory to a piggyback loan where the lender takes in all the costs, PMI is lucrative for the lender because they acquire the money, and they get paid 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 buyer keep from paying PMI?

With the implementation of The Homeowners Protection Act of 1998, on nearly all loans lenders are forced to automatically stop the PMI when the principal balance of the loan reaches 78 percent of the original loan amount. The law stipulates that, at the request of the home owner, the PMI must be dropped when the principal amount reaches just 80 percent. So, acute homeowners can get off the hook ahead of time.

It can take many years to arrive at the point where the principal is just 20% of the initial amount borrowed, so it's essential to know how your home has appreciated in value. After all, all of the appreciation you've accomplished over the years counts towards abolishing PMI. So why should you pay it after your loan balance has fallen below the 80% mark? Despite the fact that nationwide trends signify decreasing home values, be aware that real estate is local. Your neighborhood might not be adopting the national trends and/or your home could have secured equity before things simmered down.

The difficult thing for almost all homeowners to know is just when their home's equity goes over 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 Appraisals Plus, we know when property values have risen or declined. We're masters at pinpointing value trends in Philadelphia, Philadelphia County and surrounding areas. When faced with data from an appraiser, the mortgage company will most often cancel the PMI with little anxiety. At which time, the home owner 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