Let Matthew Berry help you figure out if you can eliminate your PMIIt's largely known that a 20% down payment is the standard when getting a mortgage. The lender's risk is usually only the difference between the home value and the amount remaining on the loan, so the 20% adds a nice buffer against the charges of foreclosure, selling the home again, and natural value changes in the event a purchaser doesn't pay. Banks were accepting down payments down to 10, 5 and often 0 percent in the peak of last decade's mortgage boom. How does a lender endure the added risk of the low down payment? The answer is Private Mortgage Insurance or PMI. This added policy protects the lender if a borrower defaults on the loan and the worth of the home is lower than what the borrower still owes on the loan. PMI is pricey to a borrower because the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and oftentimes isn't even tax deductible. It's money-making for the lender because they obtain the money, and they receive payment if the borrower defaults, unlike a piggyback loan where the lender consumes 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 buyers prevent bearing the expense of PMI?With the implementation of The Homeowners Protection Act of 1998, on most loans lenders are obligated to automatically eliminate the PMI when the principal balance of the loan equals 78 percent of the primary loan amount. Smart home owners can get off the hook a little early. The law pledges that, upon request of the home owner, the PMI must be released when the principal amount equals only 80 percent. Because it can take many years to reach the point where the principal is only 20% of the original amount borrowed, it's necessary to know how your home has grown in value. After all, every bit of appreciation you've gained over time counts towards abolishing PMI. So what's the reason for paying it after your loan balance has fallen below the 80% threshold? Despite the fact that nationwide trends predict plummeting home values, understand that real estate is local. Your neighborhood may not be following the national trends and/or your home may have gained equity before things settled down. 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 difficult thing to know. As appraisers, it's our job to understand the market dynamics of our area. At Matthew Berry, we know when property values have risen or declined. We're masters at determining value trends in Imperial, Jefferson County and surrounding areas. When faced with figures from an appraiser, the mortgage company will usually drop the PMI with little trouble. At that time, the homeowner can relish the savings from that point on.
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