Let Allatoona Appraisal help you discover if you can cancel your PMI

It's widely known that a 20% down payment is accepted when buying a house. The lender's only exposure is typically just the difference between the home value and the sum due on the loan, so the 20% provides a nice cushion against the costs of foreclosure, selling the home again, and typical value variations on the chance that a purchaser is unable to pay.

Banks were working with down payments discounted to 10, 5 and often 0 percent in the peak of last decade's mortgage boom. How does a lender endure the added risk of the small down payment? The solution is Private Mortgage Insurance or PMI. This additional plan takes care of the lender if a borrower defaults on the loan and the market price of the property is lower than what the borrower still owes on the loan.

PMI can be 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 frequently isn't even tax deductible. Separate from a piggyback loan where the lender takes in all the costs, PMI is beneficial for the lender because they collect the money, and they receive payment if the borrower doesn't pay.


Has your real estate appreciated since you first purchased? Call Allatoona Appraisal today at 678-574-0222 to see if you can cancel your Private Mortgage Insurance premium.

How can homebuyers avoid paying PMI?

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

Since it can take many years to reach the point where the principal is only 80% of the initial loan amount, it's crucial to know how your Georgia home has appreciated in value. After all, any appreciation you've gained over the years counts towards abolishing PMI. So what's the reason for paying it after the balance of your loan has dropped below the 80% threshold? Your neighborhood may not follow national trends and/or your home could have secured equity before the economy declined. So even when nationwide trends predict a reduction in home values, you should understand that real estate is local.

The toughest thing for many homeowners to figure out is just when their home's equity goes over the 20% point. A certified, Georgia licensed real estate appraiser can surely help. It's an appraiser's job to understand the market dynamics of their area. At Allatoona Appraisal, we know when property values have risen or declined. We're masters at pinpointing value trends in Kennesaw, Cobb County, and surrounding areas. Faced with figures from an appraiser, the mortgage company will generally do away with the PMI with little trouble. At which time, the homeowner can relish the savings from that point on.


Is PMI something increasing your monthly mortgage payment? Call Allatoona Appraisal today at 678-574-0222 or send us an e-mail. A new appraisal could save you thousands.

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