Let S.A.I.L. Associates Appraisers help you figure out if you can cancel your PMI

A 20% down payment is usually accepted when getting a mortgage. Since the liability for the lender is oftentimes only the remainder between the home value and the amount due on the loan, the 20% adds a nice buffer against the charges of foreclosure, reselling the home, and regular value changesin the event a borrower is unable to pay.

During the recent mortgage upturn of the mid 2000s, it was customary to see lenders commanding down payments of 10, 5 or even 0 percent. How does a lender endure the additional risk of the low down payment? The answer is Private Mortgage Insurance or PMI. PMI protects the lender in the event a borrower doesn't pay on the loan and the worth of the house is less than the balance of the loan.

PMI can be pricey to a borrower because the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and many times isn't even tax deductible. It's money-making for the lender because they secure the money, and they receive payment if the borrower is unable to pay, different from a piggyback loan where the lender absorbs all the costs.

Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.

How can a homebuyer refrain from bearing the cost of PMI?

With the implementation of The Homeowners Protection Act of 1998, on most loans lenders are forced to automatically stop the PMI when the principal balance of the loan reaches 78 percent of the initial loan amount. Acute homeowners can get off the hook beforehand. The law stipulates that, at the request of the homeowner, the PMI must be released when the principal amount reaches only 80 percent.

It can take countless years to arrive at the point where the principal is just 20% of the original amount borrowed, so it's crucial to know how your home has grown in value. After all, all of the appreciation you've acquired over the years counts towards dismissing PMI. So why should you pay it after your loan balance has dropped below the 80% mark? Despite the fact that nationwide trends forecast declining home values, be aware that real estate is local. Your neighborhood may not be adhering to the national trends and/or your home may have acquired equity before things calmed down.

An accredited, licensed real estate appraiser can help home owners understand just when their home's equity goes over the 20% point, as it's a hard thing to know. It is an appraiser's job to understand the market dynamics of their area. At S.A.I.L. Associates Appraisers, we know when property values have risen or declined. We're masters at pinpointing value trends in WARMINSTER, Bucks County and surrounding areas. Faced with figures from an appraiser, the mortgage company will usually eliminate the PMI with little anxiety. 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