Have equity in your home? Want a lower payment? An appraisal from Tim Norris & Associates can help you get rid of your PMI.

It's largely known that a 20% down payment is the standard when buying a house. The lender's liability is usually only the remainder between the home value and the sum due on the loan, so the 20% provides a nice cushion against the costs of foreclosure, reselling the home, and typical value variations on the chance that a purchaser doesn't pay.

Lenders were working with down payments down to 10, 5 and even 0 percent in the peak of last decade's mortgage boom. A lender is able to manage the additional risk of the low down payment with Private Mortgage Insurance or PMI. PMI guards the lender in the event a borrower defaults on the loan and the value of the house is less than what the borrower still owes on the loan.

Because the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and frequently isn't even tax deductible, PMI can be expensive to a borrower. It's lucrative for the lender because they collect the money, and they get paid if the borrower defaults, unlike 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 home owners can prevent bearing the expense of PMI

With the utilization of The Homeowners Protection Act of 1998, on nearly all loans lenders are forced to automatically cease the PMI when the principal balance of the loan equals 78 percent of the initial loan amount. Savvy homeowners can get off the hook sooner than expected. The law guarantees that, upon request of the home owner, the PMI must be released when the principal amount reaches just 80 percent.

It can take many years to arrive at the point where the principal is only 20% of the initial amount borrowed, so it's essential to know how your home has grown in value. After all, all of the appreciation you've accomplished over time counts towards abolishing PMI. So why should you pay it after the balance of your loan has fallen below the 80% threshold? Your neighborhood might not be reflecting the national trends and/or your home could have gained equity before things settled down, so even when nationwide trends signify falling home values, you should realize that real estate is local.

The difficult thing for many homeowners to understand is just when their home's equity goes over the 20% point. A certified, licensed real estate appraiser can surely help. As appraisers, it's our job to recognize the market dynamics of our area. At Tim Norris & Associates, we know when property values have risen or declined. We're experts at identifying value trends in Huntertown, Allen County and surrounding areas. Faced with figures from an appraiser, the mortgage company will usually eliminate the PMI with little trouble. 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