Allatoona Appraisal can help you remove your Private Mortgage Insurance

A 20% down payment is usually accepted when getting a mortgage. The lender's risk is generally only the remainder between the home value and the amount outstanding on the loan, so the 20% adds a nice cushion against the costs of foreclosure, reselling the home, and regular value fluctuations in the event a borrower is unable to pay.

The market was working with down payments down to 10, 5 and even 0 percent during the mortgage boom of the mid 2000s. How does a lender manage the added risk of the low down payment? The solution is Private Mortgage Insurance or PMI. This added policy guards the lender if a borrower doesn't pay on the loan and the value of the home is less than what is owed on the loan.

PMI is pricey to a borrower in that the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and often isn't even tax deductible. Unlike a piggyback loan where the lender takes in all the deficits, PMI is profitable for the lender because they secure 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 home buyers can keep from paying PMI

With the implementation of The Homeowners Protection Act of 1998, on most loans lenders are required to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the initial loan amount. Wise homeowners can get off the hook beforehand. The law designates that, upon request of the home owner, the PMI must be released when the principal amount equals only 80 percent.

Since it can take countless years to reach the point where the principal is just 20% of the original loan amount, it's important to know how your home has appreciated in value. After all, any appreciation you've achieved over the years counts towards removing PMI. So why should you pay it after your loan balance has fallen below the 80% mark? Despite the fact that nationwide trends indicate decreasing home values, understand that real estate is local. Your neighborhood might not be following the national trends and/or your home may have gained equity before things settled down.

An accredited, licensed real estate appraiser can help homeowners understand just when their home's equity goes over the 20% point, as it's a tough thing to know. 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 experts at identifying value trends in Acworth, Cobb County and surrounding areas. When faced with figures from an appraiser, the mortgage company will usually drop the PMI with little effort. At that 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