Let Appraisal Advisors Group help you figure out if you can eliminate your PMI

A 20% down payment is usually the standard when getting a mortgage. Because the risk for the lender is often only the remainder between the home value and the amount remaining on the loan, the 20% provides a nice cushion against the charges of foreclosure, selling the home again, and natural value variationson the chance that a purchaser doesn't pay.

Lenders were working with down payments as low as 10, 5 and even 0 percent during the mortgage boom of the last decade. A lender is able to endure the added risk of the low down payment with Private Mortgage Insurance or PMI. PMI covers the lender if a borrower defaults on the loan and the value of the property is lower than the balance of the loan.

PMI is costly to a borrower in that the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and oftentimes isn't even tax deductible. It's favorable for the lender because they obtain the money, and they get paid if the borrower defaults, contradictory to a piggyback loan where the lender consumes all the deficits.

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

How can buyers avoid bearing the expense of PMI?

With the employment of The Homeowners Protection Act of 1998, on most loans lenders are required to automatically terminate the PMI when the principal balance of the loan reaches 78 percent of the original loan amount. The law states that, upon request of the home owner, the PMI must be abandoned when the principal amount equals only 80 percent. So, smart homeowners can get off the hook a little earlier.

Since it can take countless years to arrive at the point where the principal is just 20% of the original loan amount, it's crucial to know how your home has appreciated in value. After all, any appreciation you've acquired over the years counts towards dismissing PMI. So why should you pay it after the balance of your loan has dropped below the 80% mark? Despite the fact that nationwide trends signify plunging home values, realize that real estate is local. Your neighborhood might not be adhering to the national trends and/or your home could have acquired equity before things cooled off.

The toughest thing for most homeowners to know is just when their home's equity rises above the 20% point. An accredited, licensed real estate appraiser can certainly help. As appraisers, it's our job to know the market dynamics of our area. At Appraisal Advisors Group, we're masters at identifying value trends in Caguas, Caguas County and surrounding areas, and we know when property values have risen or declined. When faced with information from an appraiser, the mortgage company will generally remove the PMI with little anxiety. At which time, the homeowner 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