Allatoona Appraisal can help you remove your Private Mortgage Insurance

A 20% down payment is typically accepted when buying a house. Because the liability for the lender is usually only the remainder between the home value and the sum outstanding on the loan, the 20% adds a nice buffer against the expenses of foreclosure, selling the home again, and regular value variationsin the event a borrower doesn't pay.

During the recent mortgage upturn of the mid 2000s, it was widespread to see lenders taking down payments of 10, 5 or sometimes 0 percent. A lender is able to manage the added risk of the reduced down payment with Private Mortgage Insurance or PMI. This additional policy guards the lender if a borrower defaults on the loan and the worth of the property is less than the loan balance.

Since the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and many times isn't even tax deductible, PMI is pricey to a borrower. Different from a piggyback loan where the lender absorbs all the losses, PMI is beneficial for the lender because they secure the money, and they get paid if the borrower is unable to pay.

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

How can buyers prevent bearing the cost of PMI?

The Homeowners Protection Act of 1998 makes the lenders on nearly all loans to automatically stop the PMI when the principal balance of the loan reaches 78 percent of the original loan amount. Keen home owners can get off the hook a little earlier. The law guarantees that, at the request of the home owner, the PMI must be released when the principal amount equals just 80 percent.

It can take many years to reach the point where the principal is only 20% of the original amount of the loan, so it's necessary to know how your home has increased in value. After all, any appreciation you've accomplished over time counts towards abolishing PMI. So what's the reason for paying it after the balance of your loan has fallen below the 80% mark? Your neighborhood may not be adopting the national trends and/or your home might have secured equity before things calmed down, so even when nationwide trends indicate falling home values, you should understand that real estate is local.

The difficult thing for almost all home owners 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 keep up with the market dynamics of their area. At Allatoona Appraisal, we know when property values have risen or declined. We're masters at pinpointing value trends in Acworth, Cobb County and surrounding areas. Faced with data from an appraiser, the mortgage company will generally remove the PMI with little trouble. At which time, the homeowner can relish 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