Let REVARI (Real Estate Valuation and Research Inc.) help you discover if you can eliminate your PMI

It's largely understood that a 20% down payment is the standard when getting a mortgage. The lender's risk is usually only the difference between the home value and the sum outstanding on the loan, so the 20% supplies a nice buffer against the expenses of foreclosure, selling the home again, and typical value changes in the event a borrower defaults.

During the recent mortgage boom of the mid 2000s, it became widespread to see lenders commanding down payments of 10, 5 or even 0 percent. How does a lender manage the added risk of the low down payment? The solution is Private Mortgage Insurance or PMI. PMI covers the lender in case a borrower doesn't pay on the loan and the worth of the house is lower than the balance of the loan.

PMI can be expensive to a borrower in that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and often isn't even tax deductible. It's beneficial for the lender because they secure the money, and they receive payment if the borrower defaults, different from a piggyback loan where the lender consumes 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 a homeowner keep from bearing the expense of PMI?

With the utilization of The Homeowners Protection Act of 1998, on nearly all loans lenders are forced to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount. Acute home owners can get off the hook a little early. The law pledges that, upon request of the homeowner, the PMI must be dropped when the principal amount equals just 80 percent.

Considering it can take countless years to reach the point where the principal is just 20% of the initial loan amount, it's essential to know how your home has appreciated in value. After all, any appreciation you've accomplished over the years counts towards removing PMI. So why should you pay it after your loan balance has dropped below the 80% threshold? Your neighborhood may not be heeding the national trends and/or your home might have gained equity before things settled down, so even when nationwide trends predict declining home values, you should realize that real estate is local.

The hardest thing for many home owners to understand is just when their home's equity rises above the 20% point. A certified, licensed real estate appraiser can definitely help. As appraisers, it's our job to understand the market dynamics of our area. At REVARI (Real Estate Valuation and Research Inc.), we're experts at analyzing value trends in Claremont, Sullivan 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 generally do away with 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

Paying PMI?

Would you like to save money by not having to pay for Private Mortgage Insurance? We can help. Simply fill out the form below as completely as possible and we'll send you information on how to save PMI expenses, with no obligation to you. We guarantee your privacy.

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