Have equity in your home? Want a lower payment? An appraisal from Country Manor can help you get rid of your PMI.

It's typically inferred that a 20% down payment is accepted when buying a house. The lender's liability is usually only the difference between the home value and the amount outstanding on the loan, so the 20% supplies a nice buffer against the charges of foreclosure, reselling the home, and typical value changes on the chance that a purchaser doesn't pay.

During the recent mortgage upturn of the mid 2000s, it was customary to see lenders requiring down payments of 10, 5 or often 0 percent. How does a lender handle the increased risk of the low down payment? The solution is Private Mortgage Insurance or PMI. PMI covers the lender in case a borrower defaults on the loan and the worth of the house is less than what the borrower still owes on the loan.

Since the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and many times isn't even tax deductible, PMI can be pricey to a borrower. Different from a piggyback loan where the lender absorbs all the damages, PMI is advantageous for the lender because they secure the money, and they get the money if the borrower is unable to pay.

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

How homeowners can refrain from paying PMI

With the implementation of The Homeowners Protection Act of 1998, on nearly all loans lenders are required to automatically eliminate the PMI when the principal balance of the loan reaches 78 percent of the original loan amount. The law states that, at the request of the home owner, the PMI must be abandoned when the principal amount reaches just 80 percent. So, wise home owners can get off the hook sooner than expected.

It can take many years to arrive at the point where the principal is only 20% of the original loan amount, so it's crucial to know how your home has grown in value. After all, every bit of appreciation you've gained over time counts towards removing PMI. So what's the reason for paying it after your loan balance has fallen below the 80% mark? Your neighborhood may not be following the national trends and/or your home could have gained equity before things cooled off, so even when nationwide trends hint at plunging home values, you should understand that real estate is local.

The difficult 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 definitely help. It is an appraiser's job to know the market dynamics of their area. At Country Manor, we're masters at identifying value trends in Medina, Medina County and surrounding areas, and we know when property values have risen or declined. Faced with information from an appraiser, the mortgage company will often remove the PMI with little effort. At which time, the homeowner can relish 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