Let Maria Hopkins Associates help you decide if you can get rid of your PMIA 20% down payment is usually accepted when buying a house. The lender's liability is usually only the remainder between the home value and the amount outstanding on the loan, so the 20% supplies a nice buffer against the charges of foreclosure, selling the home again, and typical value variations in the event a borrower doesn't pay. During the recent mortgage boom of the last decade, it became common to see lenders taking down payments of 10, 5 or sometimes 0 percent. How does a lender manage the increased risk of the small down payment? The solution is Private Mortgage Insurance or PMI. This added plan protects the lender in case a borrower doesn't pay on the loan and the value of the home is lower than the loan balance. PMI is costly to a borrower because the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and many times isn't even tax deductible. It's money-making for the lender because they acquire the money, and they get the money if the borrower is unable to pay, separate from a piggyback loan where the lender consumes all the losses. 
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How can homebuyers prevent bearing the cost of PMI?The Homeowners Protection Act of 1998 forces the lenders on nearly all loans to automatically terminate the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount. Acute home owners can get off the hook ahead of time. The law designates that, at the request of the homeowner, the PMI must be released when the principal amount reaches only 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 essential to know how your home has appreciated in value. After all, every bit of appreciation you've gained over the years counts towards dismissing PMI. So why should you pay it after the balance of your loan has fallen below the 80% threshold? Even when nationwide trends indicate declining home values, understand that real estate is local. Your neighborhood may not be adhering to the national trends and/or your home could have gained equity before things calmed down. A certified, licensed real estate appraiser can help home owners 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 understand the market dynamics of our area. At Maria Hopkins Associates, we're masters at pinpointing value trends in Spencer, Worcester County and surrounding areas, and we know when property values have risen or declined. Faced with information from an appraiser, the mortgage company will often remove the PMI with little trouble. At which time, the home owner can retain the savings from that point on.
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