Baker Appraisal Services, Inc. can help you remove your Private Mortgage Insurance

A 20% down payment is typically the standard when purchasing a home. Because the risk for the lender is oftentimes only the difference between the home value and the sum outstanding on the loan, the 20% adds a nice cushion against the charges of foreclosure, reselling the home, and typical value changesin the event a borrower is unable to pay.

The market was accepting down payments down to 10, 5 and often 0 percent during the mortgage boom of the last decade. A lender is able to endure the increased risk of the reduced down payment with Private Mortgage Insurance or PMI. This supplemental policy guards the lender in the event a borrower is unable to pay on the loan and the market price of the house is lower than the loan balance.

Because the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and generally isn't even tax deductible, PMI can be costly to a borrower. It's money-making for the lender because they acquire the money, and they get the money if the borrower doesn't pay, different from a piggyback loan where the lender absorbs all the losses.

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

How buyers can refrain from bearing the cost of PMI

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

Considering it can take countless years to reach the point where the principal is only 20% of the initial amount borrowed, it's essential to know how your home has grown in value. After all, every bit of appreciation you've accomplished over the years counts towards abolishing PMI. So why pay it after the balance of your loan has fallen below the 80% threshold? Your neighborhood might not be adopting the national trends and/or your home may have gained equity before things cooled off, so even when nationwide trends signify falling home values, you should realize that real estate is local.

An accredited, licensed real estate appraiser can help home owners understand just when their home's equity goes over the 20% point, as it's a tough thing to know. As appraisers, it's our job to keep up with the market dynamics of our area. At Baker Appraisal Services, Inc., we're masters at determining value trends in Camden, Kent County and surrounding areas, and we know when property values have risen or declined. Faced with data from an appraiser, the mortgage company will often cancel the PMI with little trouble. At which time, the home owner can enjoy 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