Let James Earp Appraisal Service help you discover if you can get rid of your PMIIt's widely known that a 20% down payment is the standard when purchasing a home. The lender's risk is often only the difference between the home value and the amount remaining on the loan, so the 20% supplies a nice buffer against the expenses of foreclosure, reselling the home, and natural value changes in the event a purchaser defaults. Lenders were accepting down payments down to 10, 5 and often 0 percent in the peak of last decade's mortgage boom. How does a lender endure the increased risk of the low down payment? The answer is Private Mortgage Insurance or PMI. PMI takes care of the lender if a borrower doesn't pay on the loan and the value of the home is less than the loan balance. Since the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and generally isn't even tax deductible, PMI can be costly to a borrower. Separate from a piggyback loan where the lender absorbs all the deficits, PMI is beneficial for the lender because they acquire the money, and they get the money if the borrower doesn't pay. 
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How can home owners avoid paying PMI?The Homeowners Protection Act of 1998 requires the lenders on most loans to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the initial loan amount. The law guarantees that, upon request of the homeowner, the PMI must be dropped when the principal amount reaches only 80 percent. So, savvy home owners can get off the hook a little earlier. 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 increased in value. After all, all of the appreciation you've acquired over the years counts towards dismissing PMI. So why pay it after your loan balance has fallen below the 80% threshold? Your neighborhood may not be adopting the national trends and/or your home could have secured equity before things settled down, so even when nationwide trends hint at falling home values, you should realize that real estate is local. The difficult thing for many homeowners to understand is just when their home's equity goes over the 20% point. An accredited, licensed real estate appraiser can surely help. As appraisers, it's our job to recognize the market dynamics of our area. At James Earp Appraisal Service, we know when property values have risen or declined. We're masters at determining value trends in Raleigh, Wake County and surrounding areas. When faced with information from an appraiser, the mortgage company will often eliminate the PMI with little effort. At which time, the homeowner can relish the savings from that point on.
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