Let Mike Noble Appraisals help you determine if you can get rid of your PMIIt's generally known that a 20% down payment is the standard when getting a mortgage. Because the risk for the lender is generally only the difference between the home value and the sum remaining on the loan, the 20% supplies a nice buffer against the costs of foreclosure, reselling the home, and natural value fluctuationson the chance that a purchaser is unable to pay. During the recent mortgage upturn of the last decade, it became customary to see lenders taking down payments of 10, 5 or sometimes 0 percent. How does a lender endure the increased risk of the small down payment? The answer is Private Mortgage Insurance or PMI. This supplementary plan covers the lender in case a borrower is unable to pay on the loan and the value of the house is less than the loan balance. Since the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and generally isn't even tax deductible, PMI can be costly to a borrower. Different from 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 paid 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 can homeowners prevent bearing the cost of PMI?The Homeowners Protection Act of 1998 makes the lenders on nearly all loans to automatically cancel the PMI when the principal balance of the loan reaches 78 percent of the primary loan amount. The law pledges that, upon request of the homeowner, the PMI must be abandoned when the principal amount reaches only 80 percent. So, savvy homeowners can get off the hook a little earlier. It can take many years to reach the point where the principal is only 20% of the original amount borrowed, so it's crucial to know how your home has appreciated in value. After all, every bit of appreciation you've achieved over time counts towards abolishing PMI. So what's the reason for paying it after the balance of your loan has fallen below the 80% mark? Even when nationwide trends forecast decreasing home values, understand that real estate is local. Your neighborhood might not be adopting the national trends and/or your home might have secured equity before things cooled off. The hardest thing for many home owners to know is just when their home's equity rises above the 20% point. An accredited, licensed real estate appraiser can certainly help. It is an appraiser's job to keep up with the market dynamics of their area. At Mike Noble Appraisals, we're experts at analyzing value trends in Montgomery, Elmore County and surrounding areas, and we know when property values have risen or declined. When faced with information from an appraiser, the mortgage company will generally cancel the PMI with little trouble. At which time, the homeowner can retain the savings from that point on.
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