Accurate Valuation LLC can help you remove your Private Mortgage Insurance

A 20% down payment is typically accepted when purchasing a home. Considering the liability for the lender is generally only the remainder between the home value and the sum remaining on the loan, the 20% adds a nice cushion against the costs of foreclosure, selling the home again, and typical value changesin the event a borrower is unable to pay.

Banks were taking down payments as low as 10, 5 and often 0 percent in the peak of last decade's mortgage boom. A lender is able to endure the added risk of the reduced down payment with Private Mortgage Insurance or PMI. PMI covers the lender in the event a borrower doesn't pay on the loan and the market price 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 oftentimes isn't even tax deductible, PMI can be pricey to a borrower. Separate from a piggyback loan where the lender absorbs all the costs, PMI is favorable for the lender because they obtain the money, and they get paid if the borrower is unable to pay.

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

How can a home owner keep from paying PMI?

The Homeowners Protection Act of 1998 makes the lenders on nearly all loans to automatically terminate the PMI when the principal balance of the loan equals 78 percent of the original loan amount. Keen homeowners can get off the hook ahead of time. The law states that, at the request of the homeowner, the PMI must be dropped when the principal amount equals just 80 percent.

Considering it can take many years to get to the point where the principal is just 20% of the original loan amount, it's necessary to know how your home has increased in value. After all, any appreciation you've accomplished over the years counts towards removing PMI. So why pay it after your loan balance has fallen below the 80% mark? Your neighborhood might not be reflecting the national trends and/or your home may have acquired equity before things simmered down, so even when nationwide trends predict decreasing home values, you should realize that real estate is local.

A certified, licensed real estate appraiser can help home owners understand just when their home's equity goes over the 20% point, as it's a tough thing to know. As appraisers, it's our job to understand the market dynamics of our area. At Accurate Valuation LLC, we're experts at analyzing value trends in Wellington, Larimer County and surrounding areas, and we know when property values have risen or declined. Faced with information from an appraiser, the mortgage company will generally eliminate the PMI with little trouble. 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