Timely Appraisal Services can help you remove your Private Mortgage Insurance

It's widely inferred that a 20% down payment is the standard when getting a mortgage. The lender's liability is often only the remainder between the home value and the amount due on the loan, so the 20% adds a nice buffer against the costs of foreclosure, reselling the home, and typical value variations in the event a borrower is unable to pay.

During the recent mortgage boom of the mid 2000s, it was widespread to see lenders requiring down payments of 10, 5 or sometimes 0 percent. A lender is able to endure the additional risk of the minimal down payment with Private Mortgage Insurance or PMI. This supplementary plan covers the lender in the event a borrower defaults on the loan and the value of the property is lower than what the borrower still owes 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 monthly payment and many times isn't even tax deductible. It's lucrative for the lender because they acquire the money, and they receive payment if the borrower is unable to pay, unlike a piggyback loan where the lender consumes all the costs.

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

How can home buyers avoid bearing the expense of PMI?

The Homeowners Protection Act of 1998 forces the lenders on most loans to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the primary loan amount. Acute home owners can get off the hook sooner than expected. The law designates that, at the request of the homeowner, the PMI must be released when the principal amount equals just 80 percent.

Considering it can take countless years to reach the point where the principal is just 20% of the original amount borrowed, it's crucial to know how your home has grown in value. After all, any appreciation you've gained over time counts towards dismissing PMI. So why should you pay it after the balance of your loan has dropped below the 80% mark? Your neighborhood might not be reflecting the national trends and/or your home might have gained equity before things calmed down, so even when nationwide trends signify declining home values, you should understand that real estate is local.

The hardest thing for many homeowners to understand is just when their home's equity rises above the 20% point. A certified, licensed real estate appraiser can surely help. As appraisers, it's our job to understand the market dynamics of our area. At Timely Appraisal Services, we know when property values have risen or declined. We're experts at analyzing value trends in Quinlan, Hunt County and surrounding areas. Faced with information from an appraiser, the mortgage company will most often do away with the PMI with little effort. At that time, the homeowner 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