Let Appraisal Services of Brandon, Inc . help you determine if you can eliminate your PMI

A 20% down payment is typically the standard when purchasing a home. The lender's liability is generally only the difference between the home value and the amount outstanding on the loan, so the 20% adds a nice cushion against the expenses of foreclosure, reselling the home, and typical value changes on the chance that a purchaser doesn't pay.

During the recent mortgage boom of the last decade, it was widespread to see lenders commanding down payments of 10, 5 or sometimes 0 percent. A lender is able to manage the added risk of the reduced down payment with Private Mortgage Insurance or PMI. This supplementary policy protects the lender in the event a borrower defaults on the loan and the value of the property is lower than the balance of the loan.

Because the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and generally isn't even tax deductible, PMI can be costly to a borrower. Different from a piggyback loan where the lender consumes all the damages, PMI is favorable for the lender because they acquire 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 homebuyers avoid bearing the expense of PMI?

The Homeowners Protection Act of 1998 requires the lenders on nearly all loans to automatically stop the PMI when the principal balance of the loan equals 78 percent of the primary loan amount. The law stipulates that, at the request of the home owner, the PMI must be released when the principal amount reaches only 80 percent. So, keen homeowners can get off the hook a little earlier.

Considering it can take countless years to reach the point where the principal is only 20% of the original amount of the loan, it's essential to know how your home has grown in value. After all, any appreciation you've gained over time counts towards dismissing PMI. So why pay it after your loan balance has dropped below the 80% mark? Even when nationwide trends indicate plummeting home values, understand that real estate is local. Your neighborhood might not be adopting the national trends and/or your home could have secured equity before things cooled off.

The hardest thing for many homeowners to understand is just when their home's equity goes over the 20% point. A certified, licensed real estate appraiser can definitely help. It's an appraiser's job to recognize the market dynamics of their area. At Appraisal Services of Brandon, Inc ., we know when property values have risen or declined. We're masters at identifying value trends in Valrico, Hillsborough County and surrounding areas. When faced with figures from an appraiser, the mortgage company will most often cancel the PMI with little effort. At which time, the home owner can retain 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