Corrie Appraisal & Consulting, Inc. can help you remove your Private Mortgage Insurance

It's typically known that a 20% down payment is the standard when purchasing a home. The lender's liability is usually only the difference between the home value and the sum remaining on the loan, so the 20% adds a nice cushion against the expenses of foreclosure, reselling the home, and regular value changes in the event a borrower doesn't pay.

The market was taking down payments down to 10, 5 and often 0 percent in the peak of last decade's mortgage boom. How does a lender endure the additional risk of the low down payment? The answer is Private Mortgage Insurance or PMI. This supplementary plan takes care of the lender if a borrower doesn't pay on the loan and the value of the house 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 payment and generally isn't even tax deductible. Contradictory to a piggyback loan where the lender takes in all the costs, PMI is money-making for the lender because they acquire the money, and they get the money if the borrower doesn't pay.

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

How home owners can keep from bearing the expense of PMI

The Homeowners Protection Act of 1998 makes the lenders on nearly all loans to automatically eliminate the PMI when the principal balance of the loan equals 78 percent of the original loan amount. Smart home owners can get off the hook beforehand. The law pledges that, at the request of the homeowner, the PMI must be dropped when the principal amount equals just 80 percent.

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

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 hard thing to know. As appraisers, it's our job to keep up with the market dynamics of our area. At Corrie Appraisal & Consulting, Inc., we know when property values have risen or declined. We're experts at determining value trends in Charleston, Coles County and surrounding areas. When faced with data from an appraiser, the mortgage company will usually cancel 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