Have equity in your home? Want a lower payment? An appraisal from Rabin Appraisal Associates 847-337-5787 can help you get rid of your PMI.

A 20% down payment is usually accepted when buying a house. Because the risk for the lender is generally only the remainder between the home value and the sum remaining on the loan, the 20% supplies a nice cushion against the costs of foreclosure, reselling the home, and natural value variationson the chance that a borrower defaults.

During the recent mortgage upturn of the last decade, it became customary to see lenders commanding down payments of 10, 5 or often 0 percent. How does a lender handle the increased risk of the low down payment? The answer is Private Mortgage Insurance or PMI. This added plan covers the lender in the event a borrower defaults on the loan and the value of the property is lower than the loan balance.

PMI can be pricey to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and frequently isn't even tax deductible. Separate from a piggyback loan where the lender takes in all the losses, PMI is money-making for the lender because they acquire the money, and they get the money if the borrower defaults.

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

How buyers can prevent paying PMI

With the employment of The Homeowners Protection Act of 1998, on nearly all loans lenders are required to automatically cancel the PMI when the principal balance of the loan reaches 78 percent of the original loan amount. The law stipulates that, upon request of the home owner, the PMI must be released when the principal amount equals just 80 percent. So, savvy homeowners can get off the hook sooner than expected.

Since it can take countless years to reach the point where the principal is just 20% of the original amount borrowed, it's crucial to know how your home has grown in value. After all, all of the appreciation you've acquired over time counts towards abolishing PMI. So why should you pay it after your loan balance has fallen below the 80% mark? Your neighborhood may not be reflecting the national trends and/or your home might have secured equity before things calmed down, so even when nationwide trends indicate decreasing home values, you should understand that real estate is local.

The hardest thing for most home owners to know is just when their home's equity rises above the 20% point. An accredited, licensed real estate appraiser can surely help. It's an appraiser's job to recognize the market dynamics of their area. At Rabin Appraisal Associates 847-337-5787, we're masters at identifying value trends in Gurnee, Lake 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 do away with the PMI with little effort. At which time, the home owner can enjoy 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