Have equity in your home? Want a lower payment? An appraisal from Tortorella Appraisals, Inc. can help you get rid of your PMI.

It's typically understood that a 20% down payment is the standard when getting a mortgage. Considering the liability for the lender is usually only the difference between the home value and the sum remaining on the loan, the 20% provides a nice buffer against the charges of foreclosure, selling the home again, and typical value changeson the chance that a purchaser doesn't pay.

The market was working with down payments as low as 10, 5 and even 0 percent during the mortgage boom of the mid 2000s. How does a lender manage the added risk of the small down payment? The answer is Private Mortgage Insurance or PMI. This additional policy covers the lender if a borrower defaults on the loan and the market price of the home is less than what the borrower still owes on the loan.

Because the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and many times isn't even tax deductible, PMI is costly to a borrower. Opposite from a piggyback loan where the lender absorbs all the costs, 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 homeowners prevent bearing the expense of PMI?

With the utilization of The Homeowners Protection Act of 1998, on most loans lenders are obligated to automatically terminate the PMI when the principal balance of the loan reaches 78 percent of the initial loan amount. Wise homeowners can get off the hook ahead of time. The law pledges that, upon request of the homeowner, the PMI must be abandoned when the principal amount equals only 80 percent.

It can take many years to arrive at the point where the principal is just 20% of the initial amount borrowed, so it's crucial to know how your home has grown in value. After all, any appreciation you've accomplished over time counts towards abolishing PMI. So what's the reason for paying it after the balance of your loan has fallen below the 80% mark? Despite the fact that nationwide trends indicate decreasing home values, be aware that real estate is local. Your neighborhood may not be adopting the national trends and/or your home may have secured equity before things cooled off.

The difficult thing for almost all homeowners to know is just when their home's equity goes over the 20% point. An accredited, licensed real estate appraiser can certainly help. As appraisers, it's our job to keep up with the market dynamics of our area. At Tortorella Appraisals, Inc., we're masters at pinpointing value trends in Kingston, Saratoga County and surrounding areas, and we know when property values have risen or declined. Faced with information from an appraiser, the mortgage company will usually drop the PMI with little anxiety. 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