Let AA Appraisals help you discover if you can eliminate your PMIA 20% down payment is typically the standard when purchasing a home. Considering the liability for the lender is generally only the remainder between the home value and the sum outstanding on the loan, the 20% adds a nice cushion against the charges of foreclosure, selling the home again, and typical value variationson the chance that a purchaser is unable to pay. During the recent mortgage upturn of the mid 2000s, it was common to see lenders commanding down payments of 10, 5 or sometimes 0 percent. How does a lender handle the increased risk of the small down payment? The answer is Private Mortgage Insurance or PMI. PMI guards the lender in the event a borrower doesn't pay on the loan and the market price of the house is less than what is owed on the loan. PMI is costly to a borrower in that the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and oftentimes isn't even tax deductible. It's profitable for the lender because they acquire the money, and they get the money if the borrower doesn't pay, separate 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 can a home owner keep from paying PMI?The Homeowners Protection Act of 1998 forces the lenders on most loans to automatically stop the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount. The law stipulates that, upon request of the homeowner, the PMI must be abandoned when the principal amount reaches just 80 percent. So, acute home owners can get off the hook ahead of time. Considering it can take countless years to arrive at the point where the principal is only 20% of the initial amount borrowed, it's important to know how your home has grown in value. After all, all of the appreciation you've achieved over the years counts towards removing PMI. So why pay it after the balance of your loan has fallen below the 80% threshold? Your neighborhood might not be following the national trends and/or your home might have acquired equity before things simmered down, so even when nationwide trends signify plummeting home values, you should understand that real estate is local. The difficult thing for most home owners to understand is just when their home's equity rises above the 20% point. An accredited, licensed real estate appraiser can definitely help. It's an appraiser's job to keep up with the market dynamics of their area. At AA Appraisals, we're masters at determining value trends in Stanton, Hunterdon County and surrounding areas, and we know when property values have risen or declined. Faced with information from an appraiser, the mortgage company will usually do away with the PMI with little anxiety. At which time, the homeowner can retain the savings from that point on.
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