EXPRESS APPRAISAL GROUP, LLC can help you remove your Private Mortgage Insurance

It's generally understood that a 20% down payment is accepted when buying a house. Because the risk for the lender is usually only the difference between the home value and the amount due on the loan, the 20% provides a nice buffer against the costs of foreclosure, selling the home again, and regular value fluctuationsin the event a purchaser is unable to pay.

Lenders were taking down payments down to 10, 5 and even 0 percent during the mortgage boom of the mid 2000s. How does a lender handle the increased risk of the small down payment? The answer is Private Mortgage Insurance or PMI. PMI covers the lender if a borrower is unable to pay on the loan and the value of the house is less than what the borrower still owes on the loan.

Because the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and frequently isn't even tax deductible, PMI can be expensive to a borrower. Different from a piggyback loan where the lender takes in all the damages, PMI is profitable for the lender because they secure the money, and they get the money 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 buyers can refrain from paying PMI

With the utilization of The Homeowners Protection Act of 1998, on most loans lenders are obligated to automatically terminate the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount. The law guarantees that, at the request of the home owner, the PMI must be released when the principal amount equals just 80 percent. So, smart homeowners can get off the hook sooner than expected.

Considering it can take countless years to get to the point where the principal is just 20% of the original amount of the loan, it's crucial to know how your home has grown in value. After all, every bit of appreciation you've acquired over the years counts towards dismissing PMI. So why pay it after your loan balance has dropped below the 80% mark? Your neighborhood may not be heeding the national trends and/or your home might have gained equity before things cooled off, so even when nationwide trends predict falling home values, you should realize that real estate is local.

A certified, licensed real estate appraiser can help home owners understand just when their home's equity rises above the 20% point, as it's a difficult thing to know. As appraisers, it's our job to understand the market dynamics of our area. At EXPRESS APPRAISAL GROUP, LLC, we know when property values have risen or declined. We're masters at analyzing value trends in KINNELON, Morris County and surrounding areas. When faced with data from an appraiser, the mortgage company will usually eliminate the PMI with little effort. At which 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