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

It's largely inferred that a 20% down payment is common when buying a house. The lender's risk is generally only the remainder between the home value and the sum remaining on the loan, so the 20% supplies a nice buffer against the charges of foreclosure, selling the home again, and regular value variations in the event a borrower is unable to pay.

During the recent mortgage boom of the mid 2000s, it became customary to see lenders commanding down payments of 10, 5 or even 0 percent. A lender is able to manage the additional risk of the small down payment with Private Mortgage Insurance or PMI. PMI takes care of the lender if a borrower is unable to pay on the loan and the worth of the property is lower than what the borrower still owes on the loan.

PMI is pricey to a borrower in that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and often isn't even tax deductible. Different from a piggyback loan where the lender absorbs all the deficits, PMI is lucrative for the lender because they collect the money, and they receive payment 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 homebuyers can keep from bearing the cost of PMI

With the utilization of The Homeowners Protection Act of 1998, on nearly all loans lenders are obligated to automatically terminate the PMI when the principal balance of the loan reaches 78 percent of the initial loan amount. The law stipulates that, upon request of the homeowner, the PMI must be dropped when the principal amount equals only 80 percent. So, acute homeowners can get off the hook sooner than expected.

It can take many years to get to the point where the principal is just 20% of the initial amount borrowed, so it's necessary to know how your home has grown in value. After all, every bit of appreciation you've acquired over the years counts towards abolishing PMI. So what's the reason for paying it after the balance of your loan has dropped below the 80% threshold? Despite the fact that nationwide trends forecast falling home values, realize that real estate is local. Your neighborhood may not be adopting the national trends and/or your home could have gained equity before things settled down.

A certified, licensed real estate appraiser can help homeowners understand just when their home's equity rises above the 20% point, as it's a difficult thing to know. As appraisers, it's our job to keep up with the market dynamics of our area. At KEY INSIGHT, we're experts at recognizing value trends in Rhinelander, Oneida County and surrounding areas, and we know when property values have risen or declined. Faced with figures from an appraiser, the mortgage company will often eliminate the PMI with little trouble. At that 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