Accurate Value Real Estate Appraisals can help you remove your Private Mortgage Insurance

When purchasing a home, a 20% down payment is usually the standard. Because the risk for the lender is generally only the difference between the home value and the sum outstanding on the loan, the 20% adds a nice cushion against the expenses of foreclosure, selling the home again, and typical value variationson the chance that a purchaser doesn't pay.

The market was accepting down payments as low as 10, 5 and often 0 percent in the peak of last decade's mortgage boom. A lender is able to handle the increased risk of the low down payment with Private Mortgage Insurance or PMI. This additional plan protects the lender in the event a borrower doesn't pay on the loan and the worth of the property is less than what is owed on the loan.

PMI can be costly to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage monthly payment and generally isn't even tax deductible. It's favorable for the lender because they obtain the money, and they receive payment if the borrower doesn't pay, opposite from a piggyback loan where the lender takes in all the costs.

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

How can homebuyers prevent paying PMI?

With the utilization of The Homeowners Protection Act of 1998, on nearly all loans lenders are obligated to automatically eliminate the PMI when the principal balance of the loan reaches 78 percent of the initial loan amount. The law stipulates that, at the request of the home owner, the PMI must be abandoned when the principal amount equals just 80 percent. So, acute home owners can get off the hook sooner than expected.

It can take many years to reach the point where the principal is only 20% of the original loan amount, so it's necessary to know how your home has appreciated in value. After all, every bit of appreciation you've gained over the years counts towards dismissing PMI. So why pay it after the balance of your loan has fallen below the 80% mark? Despite the fact that nationwide trends indicate plunging home values, understand that real estate is local. Your neighborhood might not be reflecting the national trends and/or your home may have acquired equity before things simmered down.

An accredited, licensed real estate appraiser can help home owners understand just when their home's equity rises above the 20% point, as it's a hard thing to know. It's an appraiser's job to understand the market dynamics of their area. At Accurate Value Real Estate Appraisals, we know when property values have risen or declined. We're experts at recognizing value trends in South Lyon, Oakland County and surrounding areas. Faced with figures from an appraiser, the mortgage company will generally drop the PMI with little effort. At which 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