Let Andrews Appraisals, Inc. help you discover if you can get rid of your PMI

A 20% down payment is typically the standard when purchasing a home. The lender's liability is generally only the difference between the home value and the amount remaining on the loan, so the 20% provides a nice cushion against the charges of foreclosure, selling the home again, and typical value fluctuations in the event a purchaser doesn't pay.

During the recent mortgage upturn of the last decade, it was widespread to see lenders commanding down payments of 10, 5 or sometimes 0 percent. A lender is able to manage the increased risk of the low down payment with Private Mortgage Insurance or PMI. This supplementary plan guards the lender in the event a borrower is unable to pay on the loan and the market price of the home is lower than the loan balance.

Since the $40-$50 a month per $100,000 borrowed is rolled into the mortgage payment and frequently isn't even tax deductible, PMI is pricey to a borrower. Separate from a piggyback loan where the lender absorbs all the losses, PMI is profitable for the lender because they collect 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 homebuyers can refrain from bearing the cost of PMI

With the employment of The Homeowners Protection Act of 1998, on most loans lenders are obligated to automatically stop the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount. The law designates that, upon request of the homeowner, the PMI must be dropped when the principal amount equals just 80 percent. So, acute home owners can get off the hook sooner than expected.

Because it can take countless years to reach the point where the principal is only 20% of the original amount of the loan, it's necessary to know how your home has increased in value. After all, any appreciation you've obtained over the years counts towards dismissing PMI. So what's the reason for paying it after your loan balance has dropped below the 80% mark? Your neighborhood might not be adhering to the national trends and/or your home could have secured equity before things calmed down, so even when nationwide trends forecast falling home values, you should understand that real estate is local.

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 difficult thing to know. It is an appraiser's job to understand the market dynamics of their area. At Andrews Appraisals, Inc., we know when property values have risen or declined. We're experts at pinpointing value trends in Winter Springs, Seminole County and surrounding areas. When faced with figures from an appraiser, the mortgage company will often drop the PMI with little trouble. At that time, the homeowner 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