Let Ultimate Georgia Appraisal, LLC help you determine if you can eliminate your PMI

A 20% down payment is usually the standard when purchasing a home. The lender's liability is oftentimes only the remainder between the home value and the sum due on the loan, so the 20% provides a nice buffer against the expenses of foreclosure, reselling the home, and natural value changes on the chance that a borrower is unable to pay.

Lenders were working with down payments as low as 10, 5 and often 0 percent during the mortgage boom of the last decade. How does a lender endure the increased risk of the low down payment? The answer is Private Mortgage Insurance or PMI. This supplemental plan protects the lender in case a borrower defaults on the loan and the worth of the home is lower than the balance of the loan.

Because the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and oftentimes isn't even tax deductible, PMI can be costly to a borrower. It's advantageous for the lender because they acquire the money, and they receive payment if the borrower is unable to pay, contradictory to a piggyback loan where the lender takes in all the damages.

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

How can homebuyers prevent paying PMI?

The Homeowners Protection Act of 1998 requires the lenders on most loans to automatically cease the PMI when the principal balance of the loan equals 78 percent of the original loan amount. The law pledges that, at the request of the home owner, the PMI must be dropped when the principal amount equals only 80 percent. So, wise homeowners can get off the hook sooner than expected.

It can take countless years to reach the point where the principal is only 20% of the initial loan amount, so it's crucial to know how your home has increased in value. After all, any appreciation you've gained over the years counts towards removing PMI. So why pay it after the balance of your loan has fallen below the 80% threshold? Even when nationwide trends signify falling home values, be aware that real estate is local. Your neighborhood may not be minding the national trends and/or your home may have acquired equity before things settled down.

The toughest thing for most home owners to know is just when their home's equity goes over the 20% point. A certified, licensed real estate appraiser can definitely help. It's an appraiser's job to recognize the market dynamics of their area. At Ultimate Georgia Appraisal, LLC, we're experts at recognizing value trends in Brooklet, Bulloch 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 generally remove the PMI with little anxiety. At that time, the home owner can retain 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