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Barnes Appraisal Company can help you remove your Private Mortgage Insurance

When purchasing a home, a 20% down payment is typically the standard. Considering the liability for the lender is generally 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 regular value variationsin the event a purchaser doesn't pay.

Lenders were taking down payments down to 10, 5 and often 0 percent during the mortgage boom of the mid 2000s. How does a lender manage the additional risk of the low down payment? The solution is Private Mortgage Insurance or PMI. This supplementary plan takes care of the lender if a borrower doesn't pay on the loan and the worth of the home is lower than what the borrower still owes on the loan.

PMI is costly to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is rolled into the mortgage payment and oftentimes isn't even tax deductible. It's favorable for the lender because they acquire the money, and they receive payment if the borrower is unable to pay, different from a piggyback loan where the lender consumes all the losses.

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 expense of PMI?

The Homeowners Protection Act of 1998 makes the lenders on most loans to automatically terminate the PMI when the principal balance of the loan reaches 78 percent of the original loan amount. The law promises that, at the request of the home owner, the PMI must be abandoned when the principal amount reaches just 80 percent. So, acute home owners can get off the hook ahead of time.

Since it can take many years to get to the point where the principal is only 20% of the original amount borrowed, it's necessary to know how your home has appreciated in value. After all, every bit of appreciation you've acquired over the years counts towards dismissing PMI. So what's the reason for paying it after your loan balance has dropped below the 80% threshold? Your neighborhood may not be minding the national trends and/or your home may have secured equity before things simmered down, so even when nationwide trends predict falling home values, you should realize that real estate is local.

A certified, licensed real estate appraiser can help home owners understand just when their home's equity goes over the 20% point, as it's a hard thing to know. It is an appraiser's job to keep up with the market dynamics of their area. At Barnes Appraisal Company, we're experts at recognizing value trends in Lawton, Comanche County and surrounding areas, and we know when property values have risen or declined. Faced with data from an appraiser, the mortgage company will most often drop the PMI with little effort. At which time, the home owner can delight in 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