Let Country Manor help you learn if you can cancel your PMI

A 20% down payment is usually accepted when purchasing a home. The lender's liability is usually only the remainder between the home value and the sum remaining on the loan, so the 20% adds a nice cushion against the charges of foreclosure, reselling the home, and regular value fluctuations on the chance that a borrower doesn't pay.

During the recent mortgage boom of the mid 2000s, it became customary to see lenders taking down payments of 10, 5 or sometimes 0 percent. A lender is able to endure the added risk of the small down payment with Private Mortgage Insurance or PMI. PMI protects the lender in the event a borrower defaults on the loan and the value of the property is less than what is owed on the loan.

Since the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and generally isn't even tax deductible, PMI can be costly to a borrower. It's favorable for the lender because they secure the money, and they get the money if the borrower defaults, separate from a piggyback loan where the lender takes in all the deficits.

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 bearing the cost of PMI

With the implementation of The Homeowners Protection Act of 1998, on most loans lenders are forced to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the primary loan amount. Wise home owners can get off the hook a little earlier. The law promises that, upon request of the home owner, the PMI must be released when the principal amount reaches only 80 percent.

It can take countless years to reach the point where the principal is only 20% of the initial amount borrowed, so it's essential to know how your home has appreciated in value. After all, every bit of appreciation you've gained over the years counts towards abolishing PMI. So what's the reason for paying it after the balance of your loan has dropped below the 80% mark? Despite the fact that nationwide trends predict falling home values, understand 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 simmered down.

A certified, licensed real estate appraiser can help home owners understand just when their home's equity goes over the 20% point, as it's a difficult thing to know. As appraisers, it's our job to understand the market dynamics of our area. At Country Manor, we're experts at recognizing value trends in Medina, Medina 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 usually do away with the PMI with little trouble. At which 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