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 buying a house, a 20% down payment is usually the standard. Considering the risk for the lender is generally only the difference between the home value and the sum due on the loan, the 20% adds a nice cushion against the expenses of foreclosure, selling the home again, and natural value fluctuationsin the event a purchaser is unable to pay.

During the recent mortgage upturn of the mid 2000s, it was common to see lenders taking down payments of 10, 5 or sometimes 0 percent. A lender is able to handle the additional risk of the reduced down payment with Private Mortgage Insurance or PMI. This supplementary policy protects the lender if a borrower doesn't pay on the loan and the value of the house is lower than what the borrower still owes on the loan.

PMI is pricey to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage monthly payment and often isn't even tax deductible. Contradictory to a piggyback loan where the lender absorbs all the damages, PMI is advantageous for the lender because they collect the money, and they get the money if the borrower doesn't pay.

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

How can homebuyers avoid paying PMI?

With the employment 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 beginning loan amount. The law guarantees that, upon request of the home owner, the PMI must be abandoned when the principal amount equals just 80 percent. So, smart home owners can get off the hook ahead of time.

Since it can take countless years to arrive at the point where the principal is only 20% of the original loan amount, it's necessary to know how your home has appreciated in value. After all, all of the appreciation you've achieved over time counts towards abolishing PMI. So what's the reason for paying it after the balance of your loan has dropped below the 80% mark? Despite the fact that nationwide trends forecast falling home values, understand that real estate is local. Your neighborhood may not be heeding the national trends and/or your home could have gained equity before things calmed down.

An accredited, 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. As appraisers, it's our job to understand the market dynamics of our 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. When faced with information from an appraiser, the mortgage company will generally remove the PMI with little effort. 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