Let Ferrara Appraisals help you decide if you can eliminate your PMIA 20% down payment is typically accepted when purchasing a home. The lender's liability is usually only the remainder between the home value and the amount outstanding on the loan, so the 20% provides a nice cushion against the expenses of foreclosure, selling the home again, and regular value fluctuations on the chance that a borrower defaults. During the recent mortgage boom of the last decade, it became common to see lenders requiring down payments of 10, 5 or even 0 percent. How does a lender handle the added risk of the low down payment? The solution is Private Mortgage Insurance or PMI. PMI takes care of the lender in the event a borrower is unable to pay on the loan and the value of the house is less than the loan balance. Because the $40-$50 a month per $100,000 borrowed is rolled into the mortgage payment and generally isn't even tax deductible, PMI can be pricey to a borrower. Different from a piggyback loan where the lender takes in all the damages, PMI is profitable for the lender because they collect 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 home buyers can keep from bearing the expense of PMIWith the utilization of The Homeowners Protection Act of 1998, on nearly all loans lenders are required to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the original loan amount. Smart homeowners can get off the hook ahead of time. The law designates that, at the request of the home owner, the PMI must be released when the principal amount equals just 80 percent. Considering it can take many years to reach the point where the principal is just 20% of the initial amount of the loan, it's crucial to know how your home has appreciated in value. After all, every bit of appreciation you've gained over the years counts towards abolishing PMI. So what's the reason for paying it after the balance of your loan has dropped below the 80% threshold? Your neighborhood might not be following the national trends and/or your home could have acquired equity before things cooled off, so even when nationwide trends indicate plunging 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 difficult thing to know. As appraisers, it's our job to keep up with the market dynamics of our area. At Ferrara Appraisals, we're experts at identifying value trends in , Montgomery County and surrounding areas, and we know when property values have risen or declined. When faced with data from an appraiser, the mortgage company will most often drop the PMI with little anxiety. At which time, the homeowner can retain the savings from that point on.
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