Have equity in your home? Want a lower payment? An appraisal from Karen Mann & Associates - Appraisal and Expert Witness Services can help you get rid of your PMI.

When buying a house, a 20% down payment is usually the standard. The lender's risk is oftentimes only the difference between the home value and the sum remaining on the loan, so the 20% adds a nice buffer against the costs of foreclosure, reselling the home, and natural value fluctuations in the event a purchaser is unable to pay.

During the recent mortgage boom of the last decade, it became widespread to see lenders commanding down payments of 10, 5 or even 0 percent. How does a lender endure the increased risk of the low down payment? The answer is Private Mortgage Insurance or PMI. This additional policy guards the lender in case a borrower is unable to pay on the loan and the worth of the property is less 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 bundled into the mortgage monthly payment and oftentimes isn't even tax deductible. Different from a piggyback loan where the lender absorbs all the deficits, PMI is beneficial for the lender because they obtain the money, and they get the money if the borrower is unable to pay.

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

How homeowners can prevent paying PMI

With the implementation of The Homeowners Protection Act of 1998, on nearly all loans lenders are forced to automatically terminate the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount. The law promises that, upon request of the homeowner, the PMI must be released when the principal amount reaches just 80 percent. So, acute homeowners can get off the hook ahead of time.

Considering it can take many years to arrive at the point where the principal is just 20% of the initial amount borrowed, it's necessary to know how your home has increased in value. After all, every bit of appreciation you've achieved over time counts towards abolishing PMI. So what's the reason for paying it after your loan balance has dropped below the 80% mark? Your neighborhood might not be minding the national trends and/or your home could have acquired equity before things simmered down, so even when nationwide trends signify falling home values, you should realize that real estate is local.

The toughest thing for almost all homeowners to know is just when their home's equity goes over the 20% point. A certified, licensed real estate appraiser can certainly help. It is an appraiser's job to keep up with the market dynamics of their area. At Karen Mann & Associates - Appraisal and Expert Witness Services, we know when property values have risen or declined. We're masters at determining value trends in Discovery Bay, Contra Costa County and surrounding areas. When faced with information from an appraiser, the mortgage company will generally eliminate the PMI with little trouble. At which time, the homeowner can relish 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