Let James Earp Appraisal Service help you determine if you can get rid of your PMIIt's generally known that a 20% down payment is the standard when getting a mortgage. Considering the risk for the lender is usually only the remainder between the home value and the amount due on the loan, the 20% provides a nice cushion against the charges of foreclosure, selling the home again, and natural value changeson the chance that a borrower defaults. Lenders were taking down payments as low as 10, 5 and often 0 percent during the mortgage boom of the last decade. How does a lender endure the additional risk of the small down payment? The answer is Private Mortgage Insurance or PMI. This additional plan covers the lender in case a borrower doesn't pay on the loan and the market price of the home is lower than the balance of the loan. Because the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and often isn't even tax deductible, PMI is pricey to a borrower. It's beneficial for the lender because they acquire the money, and they receive payment if the borrower defaults, separate from a piggyback loan where the lender absorbs all the costs. 
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How can a homebuyer keep from bearing the cost of PMI?The Homeowners Protection Act of 1998 forces the lenders on nearly all loans to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the initial loan amount. The law states that, upon request of the home owner, the PMI must be released when the principal amount equals only 80 percent. So, smart homeowners can get off the hook a little earlier. It can take many years to arrive at the point where the principal is just 20% of the initial amount of the loan, so it's necessary to know how your home has appreciated in value. After all, all of the appreciation you've accomplished over the years counts towards abolishing PMI. So why should you pay it after the balance of your loan has fallen below the 80% threshold? Your neighborhood may not be adopting the national trends and/or your home might have acquired equity before things settled down, so even when nationwide trends forecast declining 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 rises above the 20% point, as it's a hard thing to know. As appraisers, it's our job to know the market dynamics of our area. At James Earp Appraisal Service, we know when property values have risen or declined. We're experts at identifying value trends in Raleigh, Wake County and surrounding areas. Faced with information from an appraiser, the mortgage company will often cancel the PMI with little trouble. At which time, the home owner can relish the savings from that point on.
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