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Appraisal House, Inc. can help you remove your Private Mortgage Insurance

It's typically understood that a 20% down payment is common when purchasing a home. The lender's risk is often only the remainder between the home value and the amount remaining on the loan, so the 20% adds a nice cushion against the costs of foreclosure, reselling the home, and typical value changes on the chance that a purchaser defaults.

Lenders were accepting down payments as low as 10, 5 and even 0 percent in the peak of last decade's mortgage boom. A lender is able to endure the additional risk of the low down payment with Private Mortgage Insurance or PMI. PMI takes care of the lender if a borrower doesn't pay on the loan and the market price of the home is less than what the borrower still owes on the loan.

PMI is pricey to a borrower in that the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and oftentimes isn't even tax deductible. Separate from a piggyback loan where the lender absorbs all the losses, PMI is favorable for the lender because they acquire the money, and they receive payment if the borrower doesn't pay.

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

How can a homebuyer keep from bearing the expense of PMI?

With the utilization of The Homeowners Protection Act of 1998, on most loans lenders are required to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the original loan amount. Smart home owners can get off the hook beforehand. The law promises that, at the request of the homeowner, the PMI must be released when the principal amount reaches only 80 percent.

It can take countless years to arrive at the point where the principal is just 20% of the initial loan amount, so it's essential to know how your home has grown in value. After all, any appreciation you've acquired over the years counts towards removing PMI. So why should you pay it after your loan balance has dropped below the 80% threshold? Your neighborhood might not be adhering to the national trends and/or your home may have gained equity before things simmered down, so even when nationwide trends indicate decreasing home values, you should realize that real estate is local.

A certified, licensed real estate appraiser can help homeowners understand just when their home's equity rises above the 20% point, as it's a tough thing to know. It is an appraiser's job to recognize the market dynamics of their area. At Appraisal House, Inc., we know when property values have risen or declined. We're masters at identifying value trends in Destin, Okaloosa County and surrounding areas. When faced with data from an appraiser, the mortgage company will often eliminate the PMI with little trouble. At that time, the home owner 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