Let Realty Valuators, Inc help you discover if you can get rid of your PMI

When buying a house, a 20% down payment is usually the standard. The lender's liability is generally only the remainder between the home value and the sum remaining on the loan, so the 20% provides a nice cushion against the expenses of foreclosure, reselling the home, and regular value variations on the chance that a purchaser defaults.

Banks 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. This added plan takes care of the lender if a borrower doesn't pay on the loan and the market price 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 frequently isn't even tax deductible, PMI can be pricey to a borrower. Opposite from 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 paid 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 homeowner refrain from paying PMI?

The Homeowners Protection Act of 1998 requires the lenders on most loans to automatically stop the PMI when the principal balance of the loan equals 78 percent of the initial loan amount. The law pledges that, upon request of the home owner, the PMI must be released when the principal amount reaches only 80 percent. So, smart home owners can get off the hook a little earlier.

Since it can take countless years to get to the point where the principal is only 20% of the original amount of the loan, it's important to know how your home has grown in value. After all, all of the appreciation you've obtained over the years counts towards abolishing PMI. So why should you pay it after your loan balance has dropped below the 80% mark? Despite the fact that nationwide trends predict declining home values, realize that real estate is local. Your neighborhood may not be reflecting the national trends and/or your home might have secured equity before things settled down.

An accredited, licensed real estate appraiser can help homeowners understand just when their home's equity goes over the 20% point, as it's a difficult thing to know. As appraisers, it's our job to recognize the market dynamics of our area. At Realty Valuators, Inc, we're experts at identifying value trends in Sun City Center, Hillsborough County and surrounding areas, and we know when property values have risen or declined. Faced with information from an appraiser, the mortgage company will generally remove the PMI with little trouble. 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