Let Daniel Todd Appraisal Services, LLC help you decide if you can get rid of your PMI

It's widely inferred that a 20% down payment is common when purchasing a home. Considering the liability for the lender is often only the remainder between the home value and the sum outstanding on the loan, the 20% supplies a nice cushion against the charges of foreclosure, reselling the home, and regular value fluctuationson the chance that a purchaser defaults.

The market was accepting down payments down to 10, 5 and often 0 percent during the mortgage boom of the last decade. A lender is able to endure the added risk of the minimal down payment with Private Mortgage Insurance or PMI. This supplemental policy guards the lender if a borrower is unable to pay on the loan and the value of the home is lower 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 rolled into the mortgage monthly payment and frequently isn't even tax deductible. It's money-making for the lender because they obtain the money, and they get the money if the borrower doesn't pay, opposite from a piggyback loan where the lender takes in all the deficits.

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

How can a home owner avoid bearing the cost of PMI?

With the utilization of The Homeowners Protection Act of 1998, on nearly all loans lenders are forced to automatically cease the PMI when the principal balance of the loan equals 78 percent of the original loan amount. Acute home owners can get off the hook sooner than expected. The law stipulates that, at the request of the homeowner, the PMI must be released when the principal amount equals just 80 percent.

It can take countless years to arrive at the point where the principal is only 20% of the initial amount of the loan, so it's essential to know how your home has appreciated in value. After all, all of the appreciation you've achieved over time counts towards abolishing PMI. So what's the reason for paying it after your loan balance has dropped below the 80% threshold? Your neighborhood may not be minding the national trends and/or your home might have acquired equity before things settled down, so even when nationwide trends forecast decreasing 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 hard thing to know. It's an appraiser's job to understand the market dynamics of their area. At Daniel Todd Appraisal Services, LLC, we know when property values have risen or declined. We're experts at recognizing value trends in Bloomington, Monroe County and surrounding areas. When faced with figures from an appraiser, the mortgage company will most often eliminate the PMI with little trouble. 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