Let Performance Appraisals Inc. help you decide if you can get rid of your PMIWhen buying a house, a 20% down payment is usually the standard. Considering the risk for the lender is usually only the difference between the home value and the sum due on the loan, the 20% supplies a nice buffer against the charges of foreclosure, reselling the home, and regular value fluctuationsin the event a purchaser defaults. During the recent mortgage upturn of the mid 2000s, it was customary to see lenders commanding down payments of 10, 5 or even 0 percent. How does a lender handle the increased risk of the low down payment? The answer is Private Mortgage Insurance or PMI. PMI guards the lender in the event a borrower defaults on the loan and the value of the property is less than the balance of the loan. Since the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and frequently isn't even tax deductible, PMI can be expensive to a borrower. It's lucrative for the lender because they collect the money, and they receive payment if the borrower doesn't pay, opposite from a piggyback loan where the lender takes in all the costs. 
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How can buyers refrain from paying PMI?The Homeowners Protection Act of 1998 obligates the lenders on most loans to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the primary loan amount. Keen homeowners can get off the hook beforehand. The law guarantees that, upon request of the homeowner, the PMI must be dropped when the principal amount reaches only 80 percent. It can take many years to arrive at the point where the principal is just 20% of the original amount of the loan, so it's crucial to know how your home has grown in value. After all, all of the appreciation you've achieved over time counts towards dismissing PMI. So why pay it after your loan balance has fallen below the 80% threshold? Your neighborhood might not be adhering to the national trends and/or your home may have gained equity before things cooled off, so even when nationwide trends hint at plummeting home values, you should realize that real estate is local. The difficult thing for most 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. It's an appraiser's job to recognize the market dynamics of their area. At Performance Appraisals Inc., we're masters at recognizing value trends in Ponte Vedra Beach, Saint Johns County and surrounding areas, and we know when property values have risen or declined. Faced with information from an appraiser, the mortgage company will often eliminate the PMI with little effort. At which time, the home owner can relish the savings from that point on.
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