Have equity in your home? Want a lower payment? An appraisal from Hometown Appraiser, LLC can help you get rid of your PMI.

A 20% down payment is usually accepted when buying a house. The lender's risk is oftentimes only the remainder between the home value and the sum due on the loan, so the 20% adds a nice cushion against the charges of foreclosure, reselling the home, and typical value changes in the event a purchaser doesn't pay.

Lenders were working with down payments as low as 10, 5 and even 0 percent in the peak of last decade's mortgage boom. A lender is able to manage the additional risk of the small down payment with Private Mortgage Insurance or PMI. This supplementary policy covers the lender in the event a borrower doesn't pay on the loan and the worth of the property is less than the balance of the loan.

Because the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and many times isn't even tax deductible, PMI is pricey to a borrower. It's favorable for the lender because they obtain the money, and they receive payment if the borrower doesn't pay, unlike a piggyback loan where the lender takes in all the costs.

How buyers can prevent bearing the expense of PMI

With the employment of The Homeowners Protection Act of 1998, on nearly all loans lenders are forced to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount. The law designates that, at the request of the homeowner, the PMI must be abandoned when the principal amount equals just 80 percent. So, acute homeowners can get off the hook a little earlier.

It can take countless years to reach the point where the principal is just 20% of the original amount borrowed, so it's important to know how your home has grown in value. After all, any appreciation you've accomplished over time counts towards removing PMI. So why pay it after the balance of your loan has fallen below the 80% threshold? Your neighborhood may not be minding the national trends and/or your home may have gained equity before things settled down, so even when nationwide trends forecast plummeting home values, you should realize that real estate is local.

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's an appraiser's job to understand the market dynamics of their area. At Hometown Appraiser, LLC, we know when property values have risen or declined. We're masters at identifying value trends in Ocean Isle Beach, Brunswick County and surrounding areas. Faced with figures from an appraiser, the mortgage company will most often drop the PMI with little anxiety. At which time, the homeowner 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