Allatoona Appraisal can help you remove your Private Mortgage Insurance

A 20% down payment is usually accepted when getting a mortgage. The lender's liability is generally only the remainder between the home value and the balance remaining on the loan, so the 20% provides a nice cushion against the costs of foreclosure, reselling the home, and typical value changes on the chance that a purchaser defaults.

During the recent mortgage boom of the last decade, it was customary to see lenders reducing down payments to 10, 5, 3 or often 0 percent. How does a lender handle the increased risk of the small down payment? The solution is Private Mortgage Insurance or PMI. This additional policy protects the lender in the event a borrower defaults on the loan and the value of the house is lower than what is owed on the loan.

Since the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and often isn't even tax deductible, PMI can be expensive to a borrower. Separate from a piggyback loan where the lender absorbs all the damages, PMI is beneficial for the lender because they obtain the money, and they are covered if the borrower defaults.

Does your monthly mortgage payment have a lineitem for PMI? Call Allatoona Appraisal today at 678-574-0222 or send us an e-mail. Documentation of your home's present value could save you thousands.

How can homeowners prevent bearing the cost of PMI?

As a result of The Homeowners Protection Act of 1998, lenders are forced to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the original loan amount on nearly all loans. The law promises that, upon request of the home owner, the PMI must be abandoned when the principal amount equals only 80 percent. So, acute homeowners can get off the hook sooner than expected.

Because it can take a significant number of years to reach the point where the principal is only 80% of the initial amount borrowed, it's essential to know how your Georgia home has appreciated in value. After all, every bit of appreciation you've gained over the years counts towards abolishing PMI. So why pay it after your loan balance has dropped below the 80% mark? Your neighborhood might not adhere to national trends and/or your home could have secured equity before things cooled off. So even when nationwide trends forecast declining home values, you should realize that real estate is local.

An accredited, Georgia licensed real estate appraiser can help home owners figure out if their equity has made it to the 20% point, as it's a hard thing to know. As appraisers, it's our job to know the market dynamics of our area. At Allatoona Appraisal, we're masters at identifying value trends in Kennesaw, Cobb County, and surrounding areas, and we know when property values have risen or declined. When faced with data from an appraiser, the mortgage company will often do away with the PMI with little anxiety. At which time, the homeowner can enjoy the savings from that point on.

Has your home value appreciated since you first purchased? Contact Allatoona Appraisal today at 678-574-0222 to see if you can get rid of your Private Mortgage Insurance payment.

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