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Have equity in your home? Want a lower payment? An appraisal from ASAP Appraisal Group can help you get rid of your PMI.

It's widely known that a 20% down payment is the standard when buying a house. Since the liability for the lender is oftentimes only the remainder between the home value and the amount outstanding on the loan, the 20% adds a nice buffer against the costs of foreclosure, reselling the home, and typical value variationsin the event a borrower is unable to pay.

During the recent mortgage boom of the last decade, it was customary to see lenders taking down payments of 10, 5 or sometimes 0 percent. A lender is able to handle the additional risk of the small down payment with Private Mortgage Insurance or PMI. PMI covers the lender in the event a borrower defaults on the loan and the value of the home is lower than what the borrower still owes on the loan.

PMI can be costly to a borrower because the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and frequently isn't even tax deductible. It's profitable for the lender because they acquire the money, and they get paid if the borrower defaults, contradictory to a piggyback loan where the lender takes in 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 homeowners keep from bearing the expense of PMI?

The Homeowners Protection Act of 1998 obligates 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 pledges that, upon request of the homeowner, the PMI must be released when the principal amount equals just 80 percent. So, keen home owners can get off the hook a little early.

Since it can take many years to reach the point where the principal is just 20% of the initial amount borrowed, it's crucial to know how your home has grown in value. After all, all of the appreciation you've gained over the years counts towards abolishing PMI. So what's the reason for paying it after the balance of your loan has fallen below the 80% threshold? Your neighborhood might not be adopting the national trends and/or your home may have gained equity before things simmered down, so even when nationwide trends signify decreasing home values, you should understand that real estate is local.

An accredited, 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 recognize the market dynamics of our area. At ASAP Appraisal Group, we're masters at pinpointing value trends in Lakeland, Polk County and surrounding areas, and we know when property values have risen or declined. When faced with information from an appraiser, the mortgage company will usually drop the PMI with little anxiety. At which time, the homeowner can retain 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