Let McVey Appraisals (336) 229-6777 help you figure out if you can eliminate your PMIA 20% down payment is typically the standard when getting a mortgage. Considering the risk for the lender is often only the remainder between the home value and the amount outstanding on the loan, the 20% adds a nice buffer against the charges of foreclosure, selling the home again, and typical value variationson the chance that a purchaser is unable to pay. Lenders were accepting down payments down to 10, 5 and even 0 percent in the peak of last decade's mortgage boom. How does a lender manage the additional risk of the low down payment? The solution is Private Mortgage Insurance or PMI. PMI takes care of the lender in case a borrower is unable to pay on the loan and the value of the home is less than what is owed on the loan. Since the $40-$50 a month per $100,000 borrowed is rolled into the mortgage payment and many times isn't even tax deductible, PMI is costly to a borrower. Contradictory to a piggyback loan where the lender takes in all the costs, PMI is profitable for the lender because they secure 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 prevent paying PMI?The Homeowners Protection Act of 1998 makes the lenders on nearly all loans to automatically eliminate the PMI when the principal balance of the loan reaches 78 percent of the original loan amount. The law stipulates that, upon request of the home owner, the PMI must be dropped when the principal amount equals only 80 percent. So, acute home owners can get off the hook ahead of time. Since it can take many years to arrive at the point where the principal is just 20% of the initial amount borrowed, it's crucial to know how your home has increased in value. After all, any appreciation you've accomplished over the years counts towards removing PMI. So why should you pay it after your loan balance has fallen below the 80% mark? Despite the fact that nationwide trends forecast falling home values, realize that real estate is local. Your neighborhood may not be adhering to the national trends and/or your home might have gained equity before things settled 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 hard thing to know. It's an appraiser's job to recognize the market dynamics of their area. At McVey Appraisals (336) 229-6777, we're masters at analyzing value trends in Graham, Alamance County and surrounding areas, and we know when property values have risen or declined. Faced with data from an appraiser, the mortgage company will generally cancel the PMI with little anxiety. At that time, the home owner can relish the savings from that point on.
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