Have equity in your home? Want a lower payment? An appraisal from Slater Real Estate Services can help you get rid of your PMI.

When purchasing a home, a 20% down payment is usually the standard. The lender's risk is generally only the difference between the home value and the sum remaining on the loan, so the 20% supplies a nice cushion against the charges of foreclosure, selling the home again, and typical value changes in the event a purchaser doesn't pay.

The market was working with down payments down to 10, 5 and even 0 percent in the peak of last decade's mortgage boom. How does a lender manage the added risk of the small down payment? The solution is Private Mortgage Insurance or PMI. This additional policy covers the lender in the event 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 can be costly to a borrower in that the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and frequently isn't even tax deductible. It's advantageous for the lender because they collect the money, and they get the money if the borrower is unable to pay, unlike a piggyback loan where the lender consumes all the losses.

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

How home buyers can prevent bearing the cost of PMI

The Homeowners Protection Act of 1998 requires the lenders on nearly all loans to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the initial loan amount. Savvy homeowners can get off the hook beforehand. The law states that, upon request of the homeowner, the PMI must be released when the principal amount equals just 80 percent.

Since it can take many years to get to the point where the principal is just 20% of the original amount borrowed, it's essential to know how your home has increased in value. After all, any appreciation you've acquired over the years counts towards abolishing PMI. So why should you pay it after the balance of your loan has fallen below the 80% threshold? Even when nationwide trends signify plummeting home values, be aware that real estate is local. Your neighborhood may not be heeding the national trends and/or your home may have gained equity before things simmered down.

The difficult thing for many home owners to know is just when their home's equity rises above the 20% point. An accredited, licensed real estate appraiser can certainly help. It's an appraiser's job to understand the market dynamics of their area. At Slater Real Estate Services, we know when property values have risen or declined. We're masters at pinpointing value trends in Windsor, Weld County and surrounding areas. Faced with data from an appraiser, the mortgage company will often do away with the PMI with little anxiety. At which time, the home owner 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