Edwards Appraisal Service, Inc. can help you remove your Private Mortgage Insurance

It's generally understood that a 20% down payment is accepted when buying a house. Since the liability for the lender is generally only the difference between the home value and the sum remaining on the loan, the 20% adds a nice cushion against the expenses of foreclosure, selling the home again, and natural value variationson the chance that a borrower doesn't pay.

Banks were 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 manage the added risk of the low down payment with Private Mortgage Insurance or PMI. PMI takes care of the lender if a borrower defaults on the loan and the market price of the property is lower than what the borrower still owes on the loan.

PMI can be expensive to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and generally isn't even tax deductible. It's lucrative for the lender because they acquire the money, and they receive payment if the borrower defaults, contradictory to a piggyback loan where the lender absorbs all the losses.

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

How can a homebuyer refrain from bearing the expense of PMI?

The Homeowners Protection Act of 1998 makes the lenders on nearly all loans to automatically eliminate the PMI when the principal balance of the loan equals 78 percent of the original loan amount. The law designates that, upon request of the homeowner, the PMI must be released when the principal amount reaches only 80 percent. So, wise homeowners can get off the hook sooner than expected.

It can take countless years to reach the point where the principal is only 20% of the original loan amount, so it's necessary to know how your home has increased in value. After all, every bit of appreciation you've obtained over time counts towards dismissing PMI. So why pay it after the balance of your loan has fallen below the 80% threshold? Your neighborhood may not be minding the national trends and/or your home could have gained equity before things calmed down, so even when nationwide trends forecast declining home values, you should understand that real estate is local.

An accredited, licensed real estate appraiser can help homeowners understand just when their home's equity goes over the 20% point, as it's a difficult thing to know. As appraisers, it's our job to recognize the market dynamics of our area. At Edwards Appraisal Service, Inc., we know when property values have risen or declined. We're masters at recognizing value trends in Goldsboro, Wayne County and surrounding areas. Faced with figures from an appraiser, the mortgage company will generally remove the PMI with little trouble. At that time, the home owner can delight in 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