Branch Appraisal Services, Inc can help you remove your Private Mortgage Insurance

It's generally inferred that a 20% down payment is common when buying a house. Since the liability for the lender is oftentimes only the remainder between the home value and the amount due on the loan, the 20% supplies a nice cushion against the costs of foreclosure, selling the home again, and regular value fluctuationson the chance that a purchaser is unable to pay.

During the recent mortgage boom of the last decade, it became customary to see lenders taking down payments of 10, 5 or often 0 percent. A lender is able to handle the additional risk of the minimal down payment with Private Mortgage Insurance or PMI. PMI guards the lender if a borrower doesn't pay on the loan and the value of the property is lower than the balance of 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 is pricey to a borrower. It's profitable for the lender because they secure the money, and they get paid if the borrower is unable to pay, unlike a piggyback loan where the lender takes in all the losses.

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

How can a homebuyer refrain from bearing the expense of PMI?

With the utilization of The Homeowners Protection Act of 1998, on most loans lenders are forced to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the initial loan amount. Smart homeowners can get off the hook beforehand. The law states that, upon request of the home owner, 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 just 20% of the original amount borrowed, it's essential to know how your home has increased in value. After all, all of the appreciation you've gained over the years counts towards removing PMI. So why should you pay it after your loan balance has dropped below the 80% mark? Your neighborhood might not be heeding the national trends and/or your home might have acquired equity before things simmered down, so even when nationwide trends predict plunging home values, you should realize that real estate is local.

An accredited, licensed real estate appraiser can help homeowners understand just when their home's equity rises above the 20% point, as it's a hard thing to know. It is an appraiser's job to understand the market dynamics of their area. At Branch Appraisal Services, Inc, we know when property values have risen or declined. We're masters at pinpointing value trends in Indianapolis, Marion County and surrounding areas. Faced with figures from an appraiser, the mortgage company will generally drop the PMI with little trouble. At that time, the home owner 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