Let Corrie Appraisal & Consulting, Inc. help you decide if you can get rid of your PMI

A 20% down payment is typically the standard when purchasing a home. Because the risk for the lender is often only the difference between the home value and the sum remaining on the loan, the 20% adds a nice buffer against the charges of foreclosure, reselling the home, and regular value changeson the chance that a purchaser doesn't pay.

The market was taking down payments as low as 10, 5 and often 0 percent during the mortgage boom of the last decade. A lender is able to manage the additional risk of the low down payment with Private Mortgage Insurance or PMI. PMI protects the lender in case a borrower is unable to pay on the loan and the worth of the property is lower than what is owed on the loan.

Because the $40-$50 a month per $100,000 borrowed is rolled into the mortgage payment and often isn't even tax deductible, PMI can be pricey to a borrower. Unlike a piggyback loan where the lender takes in all the losses, PMI is lucrative 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 homeowners refrain from bearing the expense of PMI?

The Homeowners Protection Act of 1998 obligates the lenders on most loans to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the primary loan amount. Keen home owners can get off the hook beforehand. The law promises that, at the request of the homeowner, the PMI must be abandoned when the principal amount equals only 80 percent.

It can take countless years to get to the point where the principal is just 20% of the initial amount borrowed, so it's necessary to know how your home has appreciated in value. After all, all of the appreciation you've acquired over time counts towards dismissing PMI. So why should you pay it after your loan balance has dropped below the 80% threshold? Your neighborhood might not be following the national trends and/or your home could have gained equity before things simmered down, so even when nationwide trends forecast plunging home values, you should realize that real estate is local.

The toughest thing for almost all home owners to understand is just when their home's equity goes over the 20% point. An accredited, licensed real estate appraiser can definitely help. It is an appraiser's job to understand the market dynamics of their area. At Corrie Appraisal & Consulting, Inc., we know when property values have risen or declined. We're masters at pinpointing value trends in Charleston, Coles County and surrounding areas. When faced with figures from an appraiser, the mortgage company will often drop the PMI with little trouble. At which time, the homeowner 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