Let Performance Appraisals Inc. help you figure out if you can eliminate your PMIWhen purchasing a home, a 20% down payment is typically the standard. The lender's risk is often only the remainder between the home value and the amount remaining on the loan, so the 20% provides a nice cushion against the costs of foreclosure, selling the home again, and natural value variations in the event a purchaser defaults. Banks were taking down payments as low as 10, 5 and even 0 percent during the mortgage boom of the mid 2000s. A lender is able to endure the additional risk of the reduced down payment with Private Mortgage Insurance or PMI. This additional policy protects the lender if a borrower defaults on the loan and the value of the house is less than what is owed on the loan. PMI is pricey to a borrower because the $40-$50 a month per $100,000 borrowed is rolled into the mortgage payment and oftentimes isn't even tax deductible. It's advantageous for the lender because they obtain the money, and they get paid if the borrower is unable to pay, opposite from 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 home buyers keep from bearing the cost of PMI?The Homeowners Protection Act of 1998 makes the lenders on nearly all loans to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the original loan amount. Savvy home owners can get off the hook sooner than expected. The law stipulates that, upon request of the homeowner, the PMI must be abandoned when the principal amount equals just 80 percent. Because it can take many years to reach the point where the principal is just 20% of the initial loan amount, it's necessary to know how your home has grown in value. After all, any appreciation you've gained over the years counts towards abolishing PMI. So why pay it after the balance of your loan has fallen below the 80% threshold? Even when nationwide trends indicate declining home values, realize that real estate is local. Your neighborhood might not be reflecting the national trends and/or your home could have secured equity before things calmed down. The hardest thing for almost all home owners to understand is just when their home's equity rises above the 20% point. A certified, licensed real estate appraiser can certainly help. As appraisers, it's our job to understand the market dynamics of our area. At Performance Appraisals Inc., we know when property values have risen or declined. We're experts at analyzing value trends in Ponte Vedra Beach, Saint Johns County and surrounding areas. Faced with data from an appraiser, the mortgage company will most often do away with the PMI with little effort. At which time, the home owner can delight in the savings from that point on.
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