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

A 20% down payment is typically accepted when purchasing a home. The lender's liability is oftentimes only the difference between the home value and the sum outstanding on the loan, so the 20% provides a nice buffer against the charges of foreclosure, reselling the home, and natural value fluctuations in the event a purchaser is unable to pay.

The market was working with down payments as low as 10, 5 and often 0 percent in the peak of last decade's mortgage boom. How does a lender endure the additional risk of the small down payment? The answer is Private Mortgage Insurance or PMI. PMI protects the lender in case a borrower doesn't pay on the loan and the market price of the property is lower than the loan balance.

PMI can be costly to a borrower because the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and generally isn't even tax deductible. Different from a piggyback loan where the lender consumes all the deficits, PMI is lucrative for the lender because they acquire the money, and they get paid if the borrower defaults.

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 prevent bearing the cost of PMI?

With the implementation of The Homeowners Protection Act of 1998, on nearly all loans lenders are forced to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount. Smart homeowners can get off the hook a little early. The law states that, at the request of the homeowner, the PMI must be abandoned when the principal amount equals only 80 percent.

It can take countless years to get to the point where the principal is only 20% of the original loan amount, so it's crucial to know how your home has increased in value. After all, any appreciation you've gained over time counts towards abolishing PMI. So why pay it after your loan balance has fallen below the 80% threshold? Your neighborhood might not be adopting the national trends and/or your home may have acquired equity before things calmed down, so even when nationwide trends predict falling 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 rises above the 20% point, as it's a tough thing to know. It's an appraiser's job to keep up with the market dynamics of their area. At Edwards Appraisal Service, Inc., we know when property values have risen or declined. We're experts at identifying value trends in Goldsboro, Wayne County and surrounding areas. When faced with figures from an appraiser, the mortgage company will usually cancel the PMI with little anxiety. At that time, the homeowner 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