Have equity in your home? Want a lower payment? An appraisal from Hill Appraisal Associates, LLC can help you get rid of your PMI.

A 20% down payment is typically the standard when getting a mortgage. The lender's risk is oftentimes only the remainder between the home value and the sum outstanding on the loan, so the 20% adds a nice cushion against the expenses of foreclosure, reselling the home, and regular value fluctuations on the chance that a borrower is unable to pay.

During the recent mortgage boom of the last decade, it became widespread to see lenders commanding down payments of 10, 5 or often 0 percent. How does a lender endure the increased risk of the small down payment? The solution is Private Mortgage Insurance or PMI. PMI takes care of the lender if a borrower doesn't pay on the loan and the market price of the house is less than the balance of the loan.

Because the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and many times isn't even tax deductible, PMI is pricey to a borrower. It's lucrative for the lender because they obtain the money, and they get the money if the borrower is unable to pay, opposite from a piggyback loan where the lender absorbs 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 a home buyer keep from bearing the expense of PMI?

With the employment of The Homeowners Protection Act of 1998, on most loans lenders are required to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount. Keen homeowners can get off the hook sooner than expected. The law stipulates that, at the request of the homeowner, the PMI must be abandoned when the principal amount equals only 80 percent.

It can take many years to reach 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 appreciated in value. After all, every bit of appreciation you've gained over time counts towards removing PMI. So why should you pay it after the balance of your loan has fallen below the 80% mark? Even when nationwide trends predict decreasing home values, understand that real estate is local. Your neighborhood may not be following the national trends and/or your home might have gained equity before things simmered down.

The hardest thing for many homeowners to know is just when their home's equity goes over the 20% point. A certified, licensed real estate appraiser can surely help. It is an appraiser's job to recognize the market dynamics of their area. At Hill Appraisal Associates, LLC, we're experts at determining value trends in Elkins Park, Montgomery 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 generally drop the PMI with little effort. At which time, the home owner can retain 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