Let Daniel Todd Appraisal Services, LLC help you figure out if you can get rid of your PMIIt's largely known that a 20% down payment is the standard when buying a house. The lender's risk is usually only the difference between the home value and the sum remaining on the loan, so the 20% provides a nice cushion against the costs of foreclosure, reselling the home, and natural value variations on the chance that a purchaser doesn't pay. During the recent mortgage boom of the mid 2000s, it became common to see lenders commanding down payments of 10, 5 or sometimes 0 percent. How does a lender manage the additional risk of the low down payment? The answer is Private Mortgage Insurance or PMI. This additional plan takes care of the lender if a borrower defaults on the loan and the value of the house is lower than what is owed on the loan. PMI can be pricey to a borrower in that the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and oftentimes isn't even tax deductible. Opposite from a piggyback loan where the lender absorbs all the damages, PMI is beneficial for the lender because they secure the money, and they get paid 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 keep from paying PMIWith the implementation of The Homeowners Protection Act of 1998, on nearly all loans lenders are required to automatically cancel the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount. Savvy home owners can get off the hook sooner than expected. The law stipulates that, upon request of the homeowner, the PMI must be released when the principal amount equals just 80 percent. Considering it can take many years to arrive at the point where the principal is only 20% of the initial amount of the loan, it's crucial to know how your home has increased in value. After all, every bit of appreciation you've accomplished over the years counts towards removing PMI. So why should you pay it after your loan balance has fallen below the 80% threshold? Your neighborhood might not be heeding the national trends and/or your home could have gained equity before things calmed down, so even when nationwide trends forecast declining home values, you should understand that real estate is local. A certified, licensed real estate appraiser can help home owners understand just when their home's equity rises above the 20% point, as it's a hard thing to know. As appraisers, it's our job to recognize the market dynamics of our area. At Daniel Todd Appraisal Services, LLC, we're masters at determining value trends in Bloomington, Monroe County and surrounding areas, and we know when property values have risen or declined. Faced with figures from an appraiser, the mortgage company will most often drop the PMI with little trouble. At which time, the home owner can relish the savings from that point on.
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