Wronski Appraisal Services Inc. can help you remove your Private Mortgage Insurance

It's widely inferred that a 20% down payment is the standard when buying a house. The lender's risk is oftentimes only the remainder between the home value and the amount outstanding on the loan, so the 20% adds a nice buffer against the charges of foreclosure, selling the home again, and typical value fluctuations in the event a borrower doesn't pay.

The market was taking down payments as low as 10, 5 and even 0 percent in the peak of last decade's mortgage boom. How does a lender handle the additional risk of the low down payment? The answer is Private Mortgage Insurance or PMI. PMI covers the lender in case a borrower defaults on the loan and the worth of the property is lower than what is owed on the loan.

PMI can be pricey to a borrower because the $40-$50 a month per $100,000 borrowed is rolled into the mortgage payment and oftentimes isn't even tax deductible. Different from a piggyback loan where the lender absorbs all the deficits, PMI is money-making for the lender because they secure the money, and they receive payment if the borrower defaults.

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

How home owners can refrain from bearing the cost of PMI

The Homeowners Protection Act of 1998 obligates the lenders on most loans to automatically terminate the PMI when the principal balance of the loan reaches 78 percent of the original loan amount. Savvy homeowners can get off the hook a little early. The law stipulates that, at the request of the homeowner, the PMI must be dropped 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 of the loan, it's important to know how your home has increased in value. After all, every bit of appreciation you've obtained over the years counts towards removing PMI. So what's the reason for paying it after the balance of your loan has fallen below the 80% mark? Despite the fact that nationwide trends hint at plummeting home values, realize that real estate is local. Your neighborhood might not be heeding the national trends and/or your home might have acquired equity before things simmered down.

The difficult thing for almost all homeowners to know is just when their home's equity rises above the 20% point. An accredited, licensed real estate appraiser can certainly help. As appraisers, it's our job to understand the market dynamics of our area. At Wronski Appraisal Services Inc., we know when property values have risen or declined. We're experts at recognizing value trends in Scottsdale, Maricopa County and surrounding areas. When faced with data from an appraiser, the mortgage company will often cancel the PMI with little trouble. At which 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