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

When purchasing a home, a 20% down payment is typically the standard. The lender's risk is oftentimes only the remainder between the home value and the sum due on the loan, so the 20% adds a nice buffer against the charges of foreclosure, reselling the home, and regular value fluctuations on the chance that a purchaser doesn't pay.

During the recent mortgage boom of the last decade, it was customary to see lenders commanding down payments of 10, 5 or sometimes 0 percent. A lender is able to handle the added risk of the low down payment with Private Mortgage Insurance or PMI. This added plan takes care of the lender in the event a borrower defaults on the loan and the value of the home is less than what the borrower still owes on the loan.

PMI can be pricey to a borrower because the $40-$50 a month per $100,000 borrowed is lumped into the mortgage monthly payment and frequently isn't even tax deductible. Opposite from a piggyback loan where the lender absorbs all the damages, PMI is favorable 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 homebuyers can avoid bearing the cost of PMI

The Homeowners Protection Act of 1998 forces the lenders on nearly all loans to automatically eliminate the PMI when the principal balance of the loan equals 78 percent of the initial loan amount. The law stipulates that, upon request of the home owner, the PMI must be abandoned when the principal amount reaches only 80 percent. So, keen home owners can get off the hook ahead of time.

Because 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 appreciated in value. After all, every bit of appreciation you've gained over time counts towards removing PMI. So what's the reason for paying it after the balance of your loan has fallen below the 80% threshold? Even when nationwide trends forecast falling home values, realize that real estate is local. Your neighborhood might not be adhering to the national trends and/or your home may have gained equity before things settled down.

A certified, 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 is an appraiser's job to keep up with the market dynamics of their area. At Appraisal House, Inc., we know when property values have risen or declined. We're experts at recognizing value trends in Destin, Okaloosa County and surrounding areas. When faced with information from an appraiser, the mortgage company will most often remove the PMI with little anxiety. At which time, the home owner can delight in 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