Kent & Associates Appraisal can help you remove your Private Mortgage Insurance

A 20% down payment is usually the standard when buying a house. Because the liability for the lender is oftentimes only the difference between the home value and the sum due on the loan, the 20% provides a nice buffer against the costs of foreclosure, selling the home again, and natural value variationson the chance that a purchaser doesn't pay.

The market was working with down payments as low as 10, 5 and often 0 percent during the mortgage boom of the mid 2000s. A lender is able to endure the additional risk of the minimal down payment with Private Mortgage Insurance or PMI. PMI guards the lender in the event a borrower is unable to pay on the loan and the worth of the home is lower than what the borrower still owes on the loan.

Since the $40-$50 a month per $100,000 borrowed is rolled into the mortgage payment and often isn't even tax deductible, PMI is pricey to a borrower. It's profitable for the lender because they collect the money, and they receive payment if the borrower is unable to pay, separate from a piggyback loan where the lender absorbs all the deficits.

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

How can a home owner refrain from bearing the expense of PMI?

The Homeowners Protection Act of 1998 makes the lenders on most loans to automatically terminate the PMI when the principal balance of the loan reaches 78 percent of the original loan amount. The law guarantees that, upon request of the home owner, the PMI must be abandoned when the principal amount reaches just 80 percent. So, smart home owners can get off the hook sooner than expected.

It can take countless years to get to the point where the principal is just 20% of the initial amount borrowed, so it's essential to know how your home has grown in value. After all, every bit of appreciation you've obtained over time counts towards dismissing PMI. So what's the reason for paying it after your loan balance has dropped below the 80% threshold? Despite the fact that nationwide trends forecast decreasing home values, understand that real estate is local. Your neighborhood might not be following the national trends and/or your home could have secured equity before things simmered 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 tough thing to know. It is an appraiser's job to understand the market dynamics of their area. At Kent & Associates Appraisal, we're masters at determining value trends in Mill Creek, Snohomish County and surrounding areas, and we know when property values have risen or declined. Faced with data from an appraiser, the mortgage company will usually cancel the PMI with little trouble. At which 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