profile picture

Amerappraise, LLC can help you remove your Private Mortgage Insurance

A 20% down payment is typically the standard when getting a mortgage. The lender's risk is usually only the remainder between the home value and the sum due on the loan, so the 20% provides a nice cushion against the expenses of foreclosure, selling the home again, and typical value fluctuations in the event a borrower is unable to pay.

Lenders were accepting down payments down to 10, 5 and often 0 percent in the peak of last decade's mortgage boom. A lender is able to manage the added risk of the small down payment with Private Mortgage Insurance or PMI. This supplementary plan protects the lender in case a borrower defaults on the loan and the market price of the home is less than the loan balance.

PMI is pricey to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage monthly payment and many times isn't even tax deductible. Separate from a piggyback loan where the lender takes in all the losses, PMI is money-making for the lender because they collect the money, and they receive payment 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 homebuyers prevent paying 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 original loan amount. Acute homeowners can get off the hook beforehand. The law pledges that, at the request of the homeowner, the PMI must be released when the principal amount reaches just 80 percent.

It can take countless years to reach the point where the principal is just 20% of the initial loan amount, so it's essential to know how your home has appreciated in value. After all, any appreciation you've achieved over time counts towards abolishing PMI. So why pay it after the balance of your loan has fallen below the 80% mark? Your neighborhood might not be reflecting the national trends and/or your home could have gained equity before things calmed down, so even when nationwide trends signify declining home values, you should understand that real estate is local.

The hardest thing for many home owners to know is just when their home's equity rises above the 20% point. An accredited, licensed real estate appraiser can certainly help. It is an appraiser's job to understand the market dynamics of their area. At Amerappraise, LLC, we know when property values have risen or declined. We're masters at determining value trends in Bear, New Castle County and surrounding areas. Faced with data from an appraiser, the mortgage company will usually remove the PMI with little trouble. At that time, the home owner can relish 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