Have equity in your home? Want a lower payment? An appraisal from Taylor Appraisal Service, LLC can help you get rid of your PMI.It's generally understood that a 20% down payment is accepted when buying a house. The lender's liability is often only the difference between the home value and the sum due on the loan, so the 20% adds a nice buffer against the costs of foreclosure, reselling the home, and natural value changes on the chance that a borrower doesn't pay. During the recent mortgage upturn of the last decade, it was customary to see lenders requiring down payments of 10, 5 or even 0 percent. A lender is able to manage the additional risk of the minimal down payment with Private Mortgage Insurance or PMI. PMI covers the lender in case a borrower defaults on the loan and the value of the property is lower than the loan balance. PMI is costly to a borrower in that the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and generally isn't even tax deductible. Separate from a piggyback loan where the lender consumes all the losses, PMI is beneficial 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 keep from bearing the cost of PMI?With the implementation of The Homeowners Protection Act of 1998, on most loans lenders are forced to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the original loan amount. Smart homeowners can get off the hook a little earlier. The law promises that, upon request of the homeowner, the PMI must be dropped when the principal amount equals only 80 percent. Since it can take countless years to arrive at the point where the principal is only 20% of the initial amount of the loan, 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 abolishing PMI. So why should you pay it after your loan balance has fallen below the 80% threshold? Your neighborhood might not be reflecting the national trends and/or your home might have secured equity before things settled down, so even when nationwide trends forecast falling home values, you should realize that real estate is local. The difficult thing for many homeowners to know is just when their home's equity goes over the 20% point. A certified, licensed real estate appraiser can certainly help. As appraisers, it's our job to know the market dynamics of our area. At Taylor Appraisal Service, LLC, we know when property values have risen or declined. We're experts at determining value trends in the market area we cover. Faced with information from an appraiser, the mortgage company will usually cancel the PMI with little effort. At that time, the home owner can enjoy the savings from that point on. Want to learn more about PMI and the Homeowners Protection Act? Click this link: |