Professional Appraisals, Inc. can help you remove your Private Mortgage InsuranceWhen getting a mortgage, a 20% down payment is typically the standard. Because the liability for the lender is oftentimes only the difference between the home value and the sum outstanding on the loan, the 20% provides a nice buffer against the costs of foreclosure, selling the home again, and typical value variationsin the event a borrower doesn't pay. During the recent mortgage boom of the mid 2000s, it became widespread to see lenders requiring down payments of 10, 5 or sometimes 0 percent. How does a lender endure the added risk of the low down payment? The answer is Private Mortgage Insurance or PMI. This added policy guards the lender in case a borrower doesn't pay on the loan and the market price of the property is less than the balance of the loan. Since the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and oftentimes isn't even tax deductible, PMI is pricey to a borrower. It's money-making for the lender because they secure the money, and they get the money if the borrower is unable to pay, opposite from a piggyback loan where the lender takes in all the costs.  Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How buyers can avoid paying PMIThe Homeowners Protection Act of 1998 requires the lenders on nearly all loans to automatically terminate the PMI when the principal balance of the loan reaches 78 percent of the initial loan amount. Savvy home owners can get off the hook beforehand. The law guarantees that, upon request of the home owner, the PMI must be dropped when the principal amount reaches just 80 percent. Considering it can take countless years to reach 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, all of the appreciation you've acquired over time counts towards removing PMI. So what's the reason for paying it after the balance of your loan has fallen below the 80% threshold? Your neighborhood may not be minding the national trends and/or your home might have secured equity before things cooled off, so even when nationwide trends predict plummeting home values, you should understand that real estate is local. The hardest thing for almost all home owners to understand is just when their home's equity goes over the 20% point. An accredited, licensed real estate appraiser can definitely help. It's an appraiser's job to know the market dynamics of their area. At Professional Appraisals, Inc., we're masters at determining value trends in Cuyahoga, Geauga, and Lake County, and we know when property values have risen or declined. Faced with figures from an appraiser, the mortgage company will usually cancel the PMI with little trouble. At that time, the home owner can enjoy the savings from that point on.
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