Crescent Appraisal Group, Inc. can help you remove your Private Mortgage Insurance

It's generally inferred that a 20% down payment is the standard when purchasing a home. Because the liability for the lender is often only the remainder between the home value and the sum outstanding on the loan, the 20% provides a nice buffer against the expenses of foreclosure, reselling the home, and regular value variationson the chance that a borrower doesn't pay.

During the recent mortgage upturn of the last decade, it became widespread to see lenders taking down payments of 10, 5 or sometimes 0 percent. A lender is able to handle the increased risk of the low down payment with Private Mortgage Insurance or PMI. PMI takes care of the lender in the event a borrower doesn't pay on the loan and the market price of the house is lower than the loan balance.

PMI can be pricey to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is rolled into the mortgage payment and often isn't even tax deductible. It's profitable for the lender because they collect the money, and they get paid if the borrower defaults, different from a piggyback loan where the lender absorbs 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 home owners avoid bearing the cost of PMI?

The Homeowners Protection Act of 1998 forces the lenders on most loans to automatically eliminate 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 designates that, at the request of the home owner, the PMI must be dropped when the principal amount reaches just 80 percent.

It can take many years to get to the point where the principal is only 20% of the initial amount borrowed, so it's important to know how your home has appreciated in value. After all, every bit of appreciation you've gained over time counts towards dismissing PMI. So why pay it after your loan balance has dropped below the 80% mark? Despite the fact that nationwide trends indicate declining home values, realize that real estate is local. Your neighborhood may not be adhering to the national trends and/or your home could have acquired equity before things cooled off.

The toughest thing for many home owners to know is just when their home's equity goes over the 20% point. A certified, licensed real estate appraiser can certainly help. As appraisers, it's our job to recognize the market dynamics of our area. At Crescent Appraisal Group, Inc., we know when property values have risen or declined. We're masters at analyzing value trends in Metairie, Jefferson County and surrounding areas. When faced with data from an appraiser, the mortgage company will generally do away with the PMI with little effort. At that 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