Let Gregory James Company, Inc. help you determine if you can get rid of your PMI

When buying a house, a 20% down payment is typically the standard. Considering the risk for the lender is oftentimes only the difference between the home value and the sum remaining on the loan, the 20% provides a nice buffer against the costs of foreclosure, reselling the home, and typical value changeson the chance that a borrower doesn't pay.

During the recent mortgage upturn of the last decade, it was customary to see lenders requiring down payments of 10, 5 or even 0 percent. How does a lender handle the increased risk of the small down payment? The solution is Private Mortgage Insurance or PMI. This added policy guards the lender in the event a borrower is unable to pay on the loan and the worth of the home is lower than the balance of the loan.

PMI can be costly to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and often isn't even tax deductible. It's beneficial for the lender because they secure the money, and they get the money if the borrower defaults, contradictory to a piggyback loan where the lender takes in all the losses.

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

How homebuyers can avoid bearing the cost of PMI

The Homeowners Protection Act of 1998 obligates the lenders on nearly all loans to automatically eliminate the PMI when the principal balance of the loan equals 78 percent of the original 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, keen home owners can get off the hook ahead of time.

Because it can take many years to get to the point where the principal is just 20% of the original amount of the loan, it's essential to know how your home has appreciated in value. After all, all of the appreciation you've gained over the years counts towards removing PMI. So why should you pay it after the balance of your loan has dropped below the 80% mark? Your neighborhood may not be adhering to the national trends and/or your home might have secured equity before things simmered down, so even when nationwide trends signify plunging home values, you should realize that real estate is local.

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 recognize the market dynamics of our area. At Gregory James Company, Inc., we know when property values have risen or declined. We're masters at pinpointing value trends in Atlanta, Polk County and surrounding areas. When faced with figures from an appraiser, the mortgage company will often remove the PMI with little anxiety. At which time, the homeowner can delight in 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

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