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

It's typically inferred that a 20% down payment is the standard when buying a house. The lender's liability is usually only the difference between the home value and the amount due on the loan, so the 20% provides a nice cushion against the costs of foreclosure, reselling the home, and regular value fluctuations in the event a purchaser defaults.

The market was taking 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 endure the additional risk of the minimal down payment with Private Mortgage Insurance or PMI. This supplemental policy takes care of the lender if 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.

PMI can be pricey to a borrower because the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and generally isn't even tax deductible. It's favorable for the lender because they obtain the money, and they receive payment if the borrower defaults, contradictory to a piggyback loan where the lender consumes all the losses.

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

How homebuyers can keep from paying PMI

The Homeowners Protection Act of 1998 requires the lenders on most loans to automatically eliminate the PMI when the principal balance of the loan reaches 78 percent of the primary loan amount. Smart homeowners can get off the hook a little earlier. The law states that, at the request of the home owner, the PMI must be abandoned when the principal amount equals just 80 percent.

Since it can take many years to get to the point where the principal is just 20% of the initial amount of the loan, it's crucial to know how your home has increased in value. After all, every bit of appreciation you've acquired over time counts towards abolishing PMI. So why should you pay it after the balance of your loan has dropped below the 80% threshold? Even when nationwide trends signify plunging home values, be aware that real estate is local. Your neighborhood may not be heeding the national trends and/or your home could have secured equity before things calmed down.

A certified, licensed real estate appraiser can help homeowners understand just when their home's equity rises above the 20% point, as it's a difficult thing to know. As appraisers, it's our job to know the market dynamics of our 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. When faced with data from an appraiser, the mortgage company will most often drop the PMI with little anxiety. At which 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:
Cancellation of Private Mortgage Insurance: Federal Law May Save You Hundreds of Dollars Each Year