Have equity in your home? Want a lower payment? An appraisal from McCarthy Real Estate, Inc., Appraisal Services can help you get rid of your PMI.

It's widely inferred that a 20% down payment is common when purchasing a home. Considering the liability for the lender is usually only the difference between the home value and the amount remaining on the loan, the 20% adds a nice cushion against the costs of foreclosure, reselling the home, and natural value changesin the event a borrower defaults.

During the recent mortgage boom of the mid 2000s, it became common to see lenders requiring down payments of 10, 5 or even 0 percent. A lender is able to endure the additional risk of the minimal down payment with Private Mortgage Insurance or PMI. This supplementary policy takes care of the lender if a borrower is unable to pay on the loan and the value of the property is lower than what is owed on the loan.

Since the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and generally isn't even tax deductible, PMI can be pricey to a borrower. It's money-making for the lender because they collect the money, and they get the money if the borrower defaults, opposite 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 home owners can refrain from bearing the cost of PMI

With the employment of The Homeowners Protection Act of 1998, on nearly all loans lenders are forced to automatically stop the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount. The law stipulates that, at the request of the home owner, the PMI must be abandoned when the principal amount reaches just 80 percent. So, smart homeowners 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 essential to know how your home has grown in value. After all, any appreciation you've gained over time counts towards abolishing PMI. So why should you pay it after your loan balance has dropped below the 80% threshold? Even when nationwide trends signify declining home values, realize that real estate is local. Your neighborhood might not be minding the national trends and/or your home may have acquired equity before things calmed down.

An accredited, licensed real estate appraiser can help homeowners 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 know the market dynamics of our area. At McCarthy Real Estate, Inc., Appraisal Services, we know when property values have risen or declined. We're experts at pinpointing value trends in Marietta, Washington County and surrounding areas. Faced with information from an appraiser, the mortgage company will usually eliminate the PMI with little anxiety. At that 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