Let Lemmon Appraisal Services help you figure out if you can cancel your PMIWhen purchasing a home, a 20% down payment is usually the standard. Because the liability for the lender is oftentimes only the remainder between the home value and the sum outstanding on the loan, the 20% supplies a nice buffer against the expenses of foreclosure, reselling the home, and typical value fluctuationson the chance that a purchaser is unable to pay. During the recent mortgage upturn of the mid 2000s, it was widespread to see lenders taking down payments of 10, 5 or even 0 percent. A lender is able to manage the added risk of the low down payment with Private Mortgage Insurance or PMI. PMI covers the lender in the event a borrower doesn't pay on the loan and the market price of the property is less than the balance of the loan. Because the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and often isn't even tax deductible, PMI can be costly to a borrower. Different from a piggyback loan where the lender takes in all the losses, PMI is lucrative for the lender because they collect 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 buyers can prevent bearing the expense of PMIWith the employment of The Homeowners Protection Act of 1998, on nearly all loans lenders are required to automatically eliminate the PMI when the principal balance of the loan equals 78 percent of the primary loan amount. Smart home owners can get off the hook a little early. The law promises that, upon request of the homeowner, the PMI must be released when the principal amount reaches only 80 percent. It can take countless years to get to the point where the principal is only 20% of the initial loan amount, so it's necessary to know how your home has grown in value. After all, every bit of appreciation you've acquired over the years counts towards dismissing PMI. So why pay it after the balance of your loan has fallen below the 80% mark? Even when nationwide trends hint at falling home values, be aware that real estate is local. Your neighborhood may not be reflecting the national trends and/or your home may have secured equity before things calmed down. The hardest thing for many homeowners to understand is just when their home's equity rises above the 20% point. An accredited, licensed real estate appraiser can definitely help. It is an appraiser's job to keep up with the market dynamics of their area. At Lemmon Appraisal Services, we're masters at determining value trends in El Paso, El Paso 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 retain the savings from that point on.
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