Have equity in your home? Want a lower payment? An appraisal from Furr Appraisal Service can help you get rid of your PMI.

When purchasing a home, a 20% down payment is typically the standard. The lender's liability is oftentimes only the remainder between the home value and the sum outstanding on the loan, so the 20% supplies a nice cushion against the expenses of foreclosure, selling the home again, and typical value changes in the event a purchaser is unable to pay.

Banks were working with down payments as low as 10, 5 and often 0 percent during the mortgage boom of the mid 2000s. How does a lender manage the additional risk of the small down payment? The answer is Private Mortgage Insurance or PMI. This added policy covers the lender in case a borrower doesn't pay on the loan and the market price of the property is less than the loan balance.

PMI is pricey to a borrower in that the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and many times isn't even tax deductible. Contradictory to a piggyback loan where the lender takes in all the losses, PMI is advantageous 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 homeowners refrain from bearing the expense of PMI?

With the utilization of The Homeowners Protection Act of 1998, on nearly all loans lenders are required to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the primary loan amount. The law pledges that, upon request of the homeowner, the PMI must be dropped when the principal amount reaches only 80 percent. So, savvy homeowners can get off the hook a little early.

It can take countless years to get to the point where the principal is just 20% of the original amount borrowed, so it's necessary to know how your home has appreciated in value. After all, all of the appreciation you've gained over the years counts towards abolishing PMI. So what's the reason for paying it after your loan balance has dropped below the 80% threshold? Even when nationwide trends predict declining home values, be aware that real estate is local. Your neighborhood may not be heeding the national trends and/or your home could have gained equity before things cooled off.

The hardest thing for many homeowners to know 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 know the market dynamics of their area. At Furr Appraisal Service, we know when property values have risen or declined. We're experts at determining value trends in Camden, Benton County and surrounding areas. When faced with figures from an appraiser, the mortgage company will often cancel the PMI with little trouble. At which time, the home owner 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



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