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P.M. Appraisals, Inc. can help you remove your Private Mortgage Insurance

It's typically known that a 20% down payment is the standard when getting a mortgage. Since the risk for the lender is usually only the remainder between the home value and the amount due on the loan, the 20% supplies a nice buffer against the expenses of foreclosure, selling the home again, and typical value variationson the chance that a borrower defaults.

Lenders were taking down payments down to 10, 5 and even 0 percent in the peak of last decade's mortgage boom. A lender is able to handle the added risk of the minimal down payment with Private Mortgage Insurance or PMI. PMI protects the lender in the event a borrower defaults on the loan and the value of the home is lower than what is owed on the loan.

PMI can be expensive to a borrower because the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and often isn't even tax deductible. Different from a piggyback loan where the lender absorbs all the losses, PMI is favorable 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 buyers prevent bearing the cost of PMI?

With the employment of The Homeowners Protection Act of 1998, on nearly all loans lenders are forced to automatically stop the PMI when the principal balance of the loan reaches 78 percent of the primary loan amount. The law guarantees that, upon request of the home owner, the PMI must be dropped when the principal amount equals just 80 percent. So, savvy home owners can get off the hook a little early.

It can take countless years to arrive at the point where the principal is only 20% of the original amount borrowed, so it's important to know how your home has increased in value. After all, any appreciation you've obtained over time counts towards removing PMI. So what's the reason for paying it after your loan balance has fallen below the 80% threshold? Your neighborhood may not be following the national trends and/or your home could have secured equity before things calmed down, so even when nationwide trends signify declining home values, you should realize that real estate is local.

The hardest thing for almost all homeowners to understand is just when their home's equity rises above the 20% point. A certified, licensed real estate appraiser can definitely help. It is an appraiser's job to recognize the market dynamics of their area. At P.M. Appraisals, Inc., we're masters at identifying value trends in Babylon, Suffolk County and surrounding areas, and we know when property values have risen or declined. Faced with data from an appraiser, the mortgage company will most often cancel the PMI with little anxiety. At which time, the home owner can retain 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