Let Elkins Appraisal Service help you discover if you can cancel your PMIIt's typically understood that a 20% down payment is accepted when getting a mortgage. The lender's liability is usually only the difference between the home value and the sum remaining on the loan, so the 20% provides a nice buffer against the costs of foreclosure, selling the home again, and natural value variations in the event a borrower is unable to pay. During the recent mortgage boom of the mid 2000s, it was common to see lenders commanding down payments of 10, 5 or even 0 percent. How does a lender manage the added risk of the low down payment? The answer is Private Mortgage Insurance or PMI. PMI guards the lender in the event a borrower doesn't pay on the loan and the worth of the property is lower than the loan balance. PMI is costly to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and generally isn't even tax deductible. Separate from a piggyback loan where the lender absorbs all the deficits, PMI is beneficial for the lender because they secure 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 home owners keep from paying PMI?The Homeowners Protection Act of 1998 requires the lenders on most loans to automatically terminate the PMI when the principal balance of the loan reaches 78 percent of the initial loan amount. Smart home owners can get off the hook beforehand. The law stipulates that, upon request of the homeowner, the PMI must be released when the principal amount equals only 80 percent. It can take many years to reach the point where the principal is only 20% of the initial loan amount, so it's important to know how your home has grown in value. After all, every bit of appreciation you've obtained over the years counts towards dismissing PMI. So why should you pay it after your loan balance has fallen below the 80% threshold? Your neighborhood may not be heeding the national trends and/or your home could have acquired equity before things calmed down, so even when nationwide trends indicate falling home values, you should understand that real estate is local. The difficult thing for many homeowners to know is just when their home's equity goes over the 20% point. A certified, licensed real estate appraiser can certainly help. It is an appraiser's job to understand the market dynamics of their area. At Elkins Appraisal Service, we're experts at analyzing value trends in Lexington, Fairfield County and surrounding areas, and we know when property values have risen or declined. When faced with information from an appraiser, the mortgage company will generally do away with the PMI with little effort. At which time, the home owner can delight in the savings from that point on.
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