Peterson Appraisal Group can help you remove your Private Mortgage Insurance

A 20% down payment is usually the standard when purchasing a home. Considering the risk for the lender is often only the difference between the home value and the sum due on the loan, the 20% supplies a nice cushion against the costs of foreclosure, reselling the home, and regular value variationson the chance that a purchaser is unable to pay.

During the recent mortgage upturn of the last decade, it was customary to see lenders commanding down payments of 10, 5 or sometimes 0 percent. A lender is able to handle the additional risk of the minimal down payment with Private Mortgage Insurance or PMI. This added plan covers the lender in case a borrower defaults on the loan and the worth of the property is lower than the loan balance.

Because the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and generally isn't even tax deductible, PMI can be pricey to a borrower. Separate from a piggyback loan where the lender takes in all the costs, PMI is favorable for the lender because they collect the money, and they receive payment 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 homeowners can refrain from bearing the expense of PMI

With the employment of The Homeowners Protection Act of 1998, on nearly all loans lenders are obligated to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount. The law designates that, at the request of the homeowner, the PMI must be dropped when the principal amount equals just 80 percent. So, smart home owners can get off the hook a little early.

Because it can take countless years to arrive at the point where the principal is just 20% of the initial amount borrowed, it's essential to know how your home has increased in value. After all, all of the appreciation you've acquired over time counts towards abolishing PMI. So why pay it after your loan balance has dropped below the 80% mark? Even when nationwide trends indicate falling home values, realize that real estate is local. Your neighborhood might not be heeding the national trends and/or your home may have acquired equity before things settled down.

The toughest thing for many homeowners to understand is just when their home's equity rises above the 20% point. A certified, licensed real estate appraiser can certainly help. As appraisers, it's our job to understand the market dynamics of our area. At Peterson Appraisal Group, we're masters at analyzing value trends in Rocklin, Placer County and surrounding areas, and we know when property values have risen or declined. Faced with data from an appraiser, the mortgage company will often remove the PMI with little trouble. At that time, the home owner can enjoy 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