Let Appraisals by Kana help you determine if you can get rid of your PMIWhen purchasing a home, a 20% down payment is typically the standard. The lender's risk is generally only the remainder between the home value and the sum remaining on the loan, so the 20% provides a nice buffer against the costs of foreclosure, reselling the home, and natural value fluctuations on the chance that a borrower is unable to pay. During the recent mortgage upturn of the last decade, it was widespread to see lenders requiring down payments of 10, 5 or sometimes 0 percent. How does a lender endure the increased risk of the low down payment? The answer is Private Mortgage Insurance or PMI. This supplementary policy protects the lender in the event a borrower doesn't pay on the loan and the market price of the property is lower than what the borrower still owes on the loan. Because the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and generally isn't even tax deductible, PMI can be costly to a borrower. It's profitable for the lender because they acquire the money, and they get the money if the borrower is unable to pay, unlike a piggyback loan where the lender takes in all the damages. 
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How can homebuyers keep from bearing the expense of PMI?The Homeowners Protection Act of 1998 requires the lenders on nearly all loans to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the primary loan amount. The law stipulates that, at the request of the homeowner, the PMI must be abandoned when the principal amount equals just 80 percent. So, acute homeowners can get off the hook sooner than expected. Since it can take countless years to get to the point where the principal is just 20% of the initial amount borrowed, it's crucial to know how your home has grown in value. After all, any appreciation you've accomplished over time counts towards dismissing PMI. So why pay it after your loan balance has fallen below the 80% mark? Your neighborhood may not be adhering to the national trends and/or your home could have gained equity before things calmed down, so even when nationwide trends signify plummeting home values, you should understand that real estate is local. A certified, licensed real estate appraiser can help home owners understand just when their home's equity goes over the 20% point, as it's a difficult thing to know. As appraisers, it's our job to know the market dynamics of our area. At Appraisals by Kana, we're experts at determining value trends in Lafayette, Lafayette County and surrounding areas, and we know when property values have risen or declined. When faced with figures from an appraiser, the mortgage company will often do away with the PMI with little trouble. At which time, the home owner can delight in the savings from that point on.
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