Let Accurate Value Real Estate Appraisals help you learn if you can get rid of your PMI

It's generally known that a 20% down payment is accepted when buying a house. Because the risk for the lender is generally only the remainder between the home value and the sum due on the loan, the 20% adds a nice cushion against the charges of foreclosure, selling the home again, and typical value fluctuationson the chance that a purchaser defaults.

During the recent mortgage upturn of the last decade, it became customary to see lenders requiring down payments of 10, 5 or often 0 percent. A lender is able to endure the increased risk of the minimal down payment with Private Mortgage Insurance or PMI. This additional policy takes care of the lender in case a borrower is unable to pay on the loan and the market price of the house is less than what is owed on the loan.

PMI is costly to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and often isn't even tax deductible. Unlike a piggyback loan where the lender absorbs all the damages, PMI is profitable for the lender because they acquire the money, and they receive payment 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 can a homebuyer keep from paying PMI?

With the implementation of The Homeowners Protection Act of 1998, on most loans lenders are obligated to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the original loan amount. Acute homeowners can get off the hook a little early. The law pledges that, upon request of the homeowner, the PMI must be released when the principal amount reaches only 80 percent.

Since it can take many years to get to the point where the principal is just 20% of the initial loan amount, it's crucial to know how your home has increased in value. After all, all of the appreciation you've obtained over time counts towards dismissing PMI. So why should you pay it after the balance of your loan has fallen below the 80% mark? Despite the fact that nationwide trends hint at plunging home values, realize that real estate is local. Your neighborhood may not be adopting the national trends and/or your home might have secured equity before things cooled off.

An accredited, 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. As appraisers, it's our job to keep up with the market dynamics of our area. At Accurate Value Real Estate Appraisals, we know when property values have risen or declined. We're experts at determining value trends in South Lyon, Oakland County and surrounding areas. Faced with figures from an appraiser, the mortgage company will often drop the PMI with little anxiety. At that 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