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

When buying a house, a 20% down payment is typically the standard. Because the liability for the lender is generally only the remainder between the home value and the amount remaining on the loan, the 20% provides a nice buffer against the expenses of foreclosure, selling the home again, and regular value changeson the chance that a borrower doesn't pay.

During the recent mortgage upturn of the last decade, it became customary to see lenders taking down payments of 10, 5 or often 0 percent. How does a lender handle the added risk of the low down payment? The answer is Private Mortgage Insurance or PMI. This supplemental policy guards the lender if a borrower doesn't pay on the loan and the worth of the home is less than what is owed on the loan.

Since the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and many times isn't even tax deductible, PMI can be pricey to a borrower. It's money-making for the lender because they obtain the money, and they get paid if the borrower defaults, separate from a piggyback loan where the lender takes in 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 buyers avoid bearing the expense of PMI?

With the implementation of The Homeowners Protection Act of 1998, on nearly all loans lenders are obligated to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount. The law states that, at the request of the homeowner, the PMI must be dropped when the principal amount reaches only 80 percent. So, acute home owners can get off the hook ahead of time.

It can take countless years to arrive at the point where the principal is only 20% of the initial amount borrowed, so it's necessary to know how your home has appreciated in value. After all, all of the appreciation you've acquired over time counts towards dismissing PMI. So why should you pay it after your loan balance has dropped below the 80% mark? Despite the fact that nationwide trends hint at falling home values, be aware that real estate is local. Your neighborhood may not be minding the national trends and/or your home could have secured equity before things calmed down.

The difficult thing for most homeowners to understand is just when their home's equity rises above the 20% point. An accredited, licensed real estate appraiser can definitely help. It's an appraiser's job to recognize the market dynamics of their area. At Property Valuation Group, we're experts at identifying value trends in Ferndale, Oakland County and surrounding areas, and we know when property values have risen or declined. When faced with information from an appraiser, the mortgage company will generally remove the PMI with little effort. At that time, the home owner 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