APPRAISAL EXPRESS, INC can help you remove your Private Mortgage Insurance

It's largely inferred that a 20% down payment is accepted when buying a house. Because the liability for the lender is usually only the remainder between the home value and the amount remaining on the loan, the 20% adds a nice buffer against the costs of foreclosure, reselling the home, and typical value fluctuationsin the event a purchaser doesn't pay.

During the recent mortgage upturn of the mid 2000s, it became customary to see lenders taking down payments of 10, 5 or even 0 percent. 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 in the event a borrower defaults on the loan and the worth of the home is less than the loan balance.

PMI can be costly to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and many times isn't even tax deductible. Opposite from a piggyback loan where the lender absorbs all the costs, PMI is lucrative for the lender because they collect 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 can a buyer refrain from bearing the cost of PMI?

The Homeowners Protection Act of 1998 requires the lenders on nearly all loans to automatically terminate the PMI when the principal balance of the loan reaches 78 percent of the primary loan amount. The law guarantees that, upon request of the homeowner, the PMI must be dropped when the principal amount equals only 80 percent. So, acute home owners can get off the hook sooner than expected.

It can take many years to get to the point where the principal is just 20% of the initial loan amount, so it's important to know how your home has increased in value. After all, all of the appreciation you've obtained over the years counts towards abolishing PMI. So why should you pay it after the balance of your loan has fallen below the 80% mark? Your neighborhood might not be heeding the national trends and/or your home could have secured equity before things settled down, so even when nationwide trends forecast declining home values, you should understand that real estate is local.

The difficult thing for most homeowners to know is just when their home's equity rises above the 20% point. An accredited, licensed real estate appraiser can definitely help. As appraisers, it's our job to know the market dynamics of our area. At APPRAISAL EXPRESS, INC, we know when property values have risen or declined. We're experts at recognizing value trends in Durango, La Plata County and surrounding areas. Faced with information from an appraiser, the mortgage company will most often do away with the PMI with little anxiety. At which time, the home owner can retain 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