Have equity in your home? Want a lower payment? An appraisal from South Shore Appraisals can help you get rid of your PMI.

A 20% down payment is typically accepted when buying a house. Because the risk for the lender is often only the difference between the home value and the amount due on the loan, the 20% supplies a nice buffer against the costs of foreclosure, reselling the home, and typical value variationson the chance that a borrower is unable to pay.

During the recent mortgage upturn of the last decade, it became widespread to see lenders commanding down payments of 10, 5 or often 0 percent. How does a lender endure the additional risk of the small down payment? The answer is Private Mortgage Insurance or PMI. PMI guards the lender in case a borrower is unable to pay on the loan and the market price of the property is less than what the borrower still owes on the loan.

PMI is costly to a borrower in that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage monthly payment and generally isn't even tax deductible. Unlike a piggyback loan where the lender consumes all the costs, PMI is lucrative for the lender because they obtain the money, and they get paid if the borrower defaults.

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

How can a homeowner avoid paying PMI?

With the utilization of The Homeowners Protection Act of 1998, on most loans lenders are forced to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount. The law designates that, at the request of the home owner, the PMI must be abandoned when the principal amount equals just 80 percent. So, keen homeowners can get off the hook a little earlier.

Because it can take countless years to arrive at the point where the principal is only 20% of the initial loan amount, it's crucial to know how your home has grown in value. After all, any appreciation you've gained over time counts towards removing PMI. So why pay it after the balance of your loan has fallen below the 80% mark? Despite the fact that nationwide trends signify falling home values, understand that real estate is local. Your neighborhood might not be following the national trends and/or your home may have acquired equity before things settled 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 South Shore Appraisals, we know when property values have risen or declined. We're experts at analyzing value trends in Schererville, Lake County and surrounding areas. When faced with information from an appraiser, the mortgage company will most often do away with the PMI with little effort. At that 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