Let Corrie Appraisal & Consulting, Inc. help you determine if you can eliminate your PMI

A 20% down payment is typically accepted when getting a mortgage. Considering the risk for the lender is usually only the difference between the home value and the amount remaining on the loan, the 20% supplies a nice cushion against the costs of foreclosure, selling the home again, and natural value fluctuationson the chance that a purchaser defaults.

The market was working with down payments as low as 10, 5 and even 0 percent during the mortgage boom of the mid 2000s. How does a lender endure the increased risk of the small down payment? The answer is Private Mortgage Insurance or PMI. PMI covers the lender in case a borrower defaults on the loan and the market price of the home is lower than what the borrower still owes on the loan.

PMI can be pricey to a borrower because the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and oftentimes isn't even tax deductible. It's favorable for the lender because they acquire the money, and they get paid if the borrower is unable to pay, separate from a piggyback loan where the lender consumes all the losses.

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

How home buyers can avoid bearing the cost of PMI

With the utilization of The Homeowners Protection Act of 1998, on nearly all loans lenders are obligated to automatically eliminate the PMI when the principal balance of the loan equals 78 percent of the original loan amount. The law states that, at the request of the home owner, the PMI must be dropped when the principal amount equals only 80 percent. So, keen homeowners can get off the hook a little early.

Because it can take many years to reach the point where the principal is just 20% of the original amount borrowed, it's necessary to know how your home has grown in value. After all, every bit of appreciation you've gained over time counts towards abolishing PMI. So why should you pay it after the balance of your loan has fallen below the 80% mark? Your neighborhood might not be minding the national trends and/or your home may have secured equity before things calmed down, so even when nationwide trends signify plunging home values, you should understand that real estate is local.

The toughest thing for almost all homeowners to know is just when their home's equity rises above the 20% point. A certified, licensed real estate appraiser can surely help. It is an appraiser's job to keep up with the market dynamics of their area. At Corrie Appraisal & Consulting, Inc., we know when property values have risen or declined. We're experts at recognizing value trends in Charleston, Coles County and surrounding areas. When faced with data from an appraiser, the mortgage company will often eliminate the PMI with little effort. At that 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