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

When buying a house, a 20% down payment is typically the standard. The lender's risk is generally only the difference between the home value and the amount due on the loan, so the 20% supplies a nice cushion against the charges of foreclosure, selling the home again, and natural value variations in the event a purchaser is unable to pay.

Banks were accepting down payments down to 10, 5 and often 0 percent in the peak of last decade's mortgage boom. How does a lender manage the added risk of the low down payment? The answer is Private Mortgage Insurance or PMI. PMI takes care of the lender in case a borrower defaults on the loan and the market price of the home is lower than what is owed 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 is pricey to a borrower. Separate from a piggyback loan where the lender consumes all the costs, PMI is beneficial for the lender because they obtain the money, and they get the money if the borrower defaults.

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

How can a buyer avoid bearing the expense 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 beginning loan amount. The law guarantees that, at the request of the homeowner, the PMI must be released when the principal amount equals only 80 percent. So, acute home owners can get off the hook a little early.

Considering it can take many years to arrive at the point where the principal is just 20% of the initial amount borrowed, it's necessary to know how your home has increased in value. After all, all of the appreciation you've obtained over the years counts towards dismissing PMI. So why pay it after your loan balance has dropped below the 80% mark? Despite the fact that nationwide trends hint at plunging home values, realize that real estate is local. Your neighborhood may not be adhering to the national trends and/or your home might have secured equity before things calmed down.

A certified, 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's an appraiser's job to understand the market dynamics of their area. At EXPRESS APPRAISAL GROUP, LLC, we know when property values have risen or declined. We're experts at determining value trends in KINNELON, Morris County and surrounding areas. Faced with figures from an appraiser, the mortgage company will most often 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