Have equity in your home? Want a lower payment? An appraisal from Appraisal Services of Brandon, Inc . can help you get rid of your PMI.

When getting a mortgage, a 20% down payment is usually the standard. The lender's risk is usually only the difference between the home value and the sum due on the loan, so the 20% adds a nice buffer against the charges of foreclosure, selling the home again, and natural value variations in the event a borrower defaults.

During the recent mortgage upturn of the mid 2000s, it became customary to see lenders taking down payments of 10, 5 or even 0 percent. How does a lender endure the additional risk of the low down payment? The answer is Private Mortgage Insurance or PMI. This supplemental plan takes care of the lender in the event a borrower is unable to pay on the loan and the value of the home is lower than the balance of the loan.

Because the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and often isn't even tax deductible, PMI can be expensive to a borrower. It's advantageous for the lender because they collect the money, and they get paid if the borrower defaults, separate from a piggyback loan where the lender consumes all the deficits.

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

How homeowners can keep from bearing the cost of PMI

With the utilization of The Homeowners Protection Act of 1998, on nearly all loans lenders are required to automatically eliminate the PMI when the principal balance of the loan equals 78 percent of the primary loan amount. The law states that, upon request of the homeowner, the PMI must be abandoned when the principal amount reaches only 80 percent. So, savvy homeowners can get off the hook a little early.

It can take many years to reach the point where the principal is just 20% of the original amount of the loan, so it's important to know how your home has appreciated in value. After all, all of the appreciation you've accomplished over time counts towards dismissing PMI. So why pay it after your loan balance has dropped below the 80% mark? Your neighborhood may not be minding the national trends and/or your home might have gained equity before things simmered down, so even when nationwide trends forecast declining home values, you should understand that real estate is local.

A certified, 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 is an appraiser's job to understand the market dynamics of their area. At Appraisal Services of Brandon, Inc ., we know when property values have risen or declined. We're masters at recognizing value trends in Valrico, Hillsborough County and surrounding areas. Faced with data from an appraiser, the mortgage company will generally eliminate the PMI with little anxiety. At that time, the homeowner can relish 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