Have equity in your home? Want a lower payment? An appraisal from Reitzler Appraisal Services can help you get rid of your PMI.It's widely understood that a 20% down payment is common when purchasing a home. Considering the risk for the lender is usually only the difference between the home value and the sum due on the loan, the 20% provides a nice cushion against the costs of foreclosure, reselling the home, and typical value fluctuationsin the event a borrower defaults. During the recent mortgage boom of the mid 2000s, it was common to see lenders taking down payments of 10, 5 or sometimes 0 percent. How does a lender endure the added risk of the low down payment? The solution is Private Mortgage Insurance or PMI. This additional plan protects the lender in case a borrower doesn't pay on the loan and the worth of the house is lower than the loan balance. Because the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and generally isn't even tax deductible, PMI can be expensive to a borrower. It's favorable for the lender because they secure the money, and they get the money if the borrower is unable to pay, different 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 buyers avoid 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 reaches 78 percent of the beginning loan amount. The law states that, at the request of the homeowner, the PMI must be released when the principal amount equals only 80 percent. So, smart homeowners can get off the hook sooner than expected. Because it can take countless years to get to the point where the principal is only 20% of the original amount of the loan, it's important to know how your home has increased in value. After all, any appreciation you've accomplished over the years counts towards removing PMI. So what's the reason for paying it after your loan balance has fallen below the 80% threshold? Even when nationwide trends hint at plunging home values, be aware that real estate is local. Your neighborhood may not be minding the national trends and/or your home could have gained equity before things settled down. The difficult thing for almost all homeowners to understand is just when their home's equity goes over the 20% point. An accredited, licensed real estate appraiser can definitely help. It's an appraiser's job to keep up with the market dynamics of their area. At Reitzler Appraisal Services, we're masters at determining value trends in Richmond, Wayne County and surrounding areas, and we know when property values have risen or declined. Faced with information from an appraiser, the mortgage company will generally eliminate the PMI with little anxiety. At that time, the homeowner can delight in the savings from that point on.
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