Tortorella Appraisals, Inc. can help you remove your Private Mortgage Insurance

It's typically known that a 20% down payment is accepted when buying a house. Because the risk for the lender is generally only the difference between the home value and the amount remaining on the loan, the 20% provides a nice buffer against the costs of foreclosure, reselling the home, and typical value fluctuationsin the event a borrower is unable to pay.

The market was working with down payments down to 10, 5 and even 0 percent in the peak of last decade's mortgage boom. A lender is able to endure the added risk of the small down payment with Private Mortgage Insurance or PMI. This additional policy protects the lender in case a borrower is unable to pay on the loan and the worth of the house is less than what is owed on the loan.

Since the $40-$50 a month per $100,000 borrowed is lumped into the mortgage monthly payment and oftentimes isn't even tax deductible, PMI is pricey to a borrower. Contradictory to a piggyback loan where the lender takes in all the losses, PMI is advantageous for the lender because they acquire the money, and they get the money if the borrower doesn't pay.

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

How can buyers avoid paying PMI?

With the implementation of The Homeowners Protection Act of 1998, on most loans lenders are forced to automatically stop the PMI when the principal balance of the loan reaches 78 percent of the initial loan amount. The law designates that, upon request of the home owner, the PMI must be dropped when the principal amount reaches just 80 percent. So, savvy homeowners can get off the hook sooner than expected.

Because it can take many years to get to the point where the principal is only 20% of the original loan amount, it's essential to know how your home has appreciated in value. After all, any appreciation you've obtained over time counts towards dismissing PMI. So why should you pay it after your loan balance has dropped below the 80% threshold? Despite the fact that nationwide trends signify falling home values, understand that real estate is local. Your neighborhood might not be heeding the national trends and/or your home could have acquired equity before things calmed down.

The toughest thing for many homeowners to understand is just when their home's equity goes over the 20% point. A certified, licensed real estate appraiser can definitely help. As appraisers, it's our job to understand the market dynamics of our area. At Tortorella Appraisals, Inc., we're experts at identifying value trends in Kingston, Ulster County and surrounding areas, and we know when property values have risen or declined. When faced with information from an appraiser, the mortgage company will often cancel the PMI with little trouble. At that time, the home owner can delight in 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