Let Karen Mann & Associates - Appraisal and Expert Witness Services help you learn if you can get rid of your PMI

A 20% down payment is usually the standard when getting a mortgage. Since the liability for the lender is oftentimes only the remainder between the home value and the amount outstanding on the loan, the 20% provides a nice cushion against the expenses of foreclosure, selling the home again, and typical value variationsin the event a borrower defaults.

During the recent mortgage boom of the mid 2000s, it became widespread to see lenders requiring down payments of 10, 5 or often 0 percent. A lender is able to endure the added risk of the small down payment with Private Mortgage Insurance or PMI. This added policy takes care of the lender in case a borrower defaults on the loan and the value of the house is less than the balance of the loan.

PMI can be expensive to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and generally isn't even tax deductible. Unlike a piggyback loan where the lender takes in all the damages, PMI is money-making for the lender because they acquire the money, and they get the money 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 can a homeowner keep from paying PMI?

The Homeowners Protection Act of 1998 requires the lenders on most loans to automatically eliminate the PMI when the principal balance of the loan reaches 78 percent of the original loan amount. The law stipulates that, upon request of the home owner, the PMI must be abandoned when the principal amount equals only 80 percent. So, acute home owners can get off the hook a little earlier.

It can take many years to reach the point where the principal is only 20% of the initial loan amount, so it's necessary to know how your home has grown in value. After all, all of the appreciation you've accomplished over the years counts towards removing PMI. So why pay it after your loan balance has fallen below the 80% threshold? Your neighborhood may not be minding the national trends and/or your home might have acquired equity before things simmered down, so even when nationwide trends forecast decreasing home values, you should realize that real estate is local.

The toughest 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 surely help. As appraisers, it's our job to recognize the market dynamics of our area. At Karen Mann & Associates - Appraisal and Expert Witness Services, we're experts at analyzing value trends in Discovery Bay, Contra Costa 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 remove the PMI with little trouble. At which time, the home owner can delight in 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