Karen A. Zirpoli - KAZ Appraisals, LLC can help you remove your Private Mortgage Insurance

It's typically known that a 20% down payment is common when buying a house. Considering the liability for the lender is often only the remainder between the home value and the sum outstanding on the loan, the 20% supplies a nice cushion against the costs of foreclosure, selling the home again, and typical value changesin the event a purchaser defaults.

The market was taking down payments as low as 10, 5 and often 0 percent during the mortgage boom of the last decade. How does a lender endure the increased risk of the small down payment? The solution is Private Mortgage Insurance or PMI. PMI protects the lender in the event a borrower is unable to pay on the loan and the worth of the property is less than what the borrower still owes on the loan.

PMI can be expensive to a borrower in that the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and often isn't even tax deductible. It's favorable for the lender because they obtain the money, and they get paid if the borrower is unable to pay, contradictory to a piggyback loan where the lender consumes all the costs.

How can a home buyer keep from bearing the expense of PMI?

The Homeowners Protection Act of 1998 requires the lenders on nearly all loans to automatically stop the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount. The law stipulates that, at the request of the homeowner, the PMI must be dropped when the principal amount equals just 80 percent. So, acute homeowners can get off the hook ahead of time.

Because it can take many years to reach the point where the principal is only 20% of the initial amount borrowed, it's important to know how your home has appreciated in value. After all, every bit of appreciation you've obtained over the years counts towards abolishing PMI. So why should you pay it after your loan balance has fallen below the 80% mark? Even when nationwide trends signify plummeting home values, understand that real estate is local. Your neighborhood might not be adopting the national trends and/or your home might have acquired equity before things simmered down.

A certified, licensed real estate appraiser can help homeowners understand just when their home's equity rises above the 20% point, as it's a tough thing to know. It is an appraiser's job to keep up with the market dynamics of their area. At Karen A. Zirpoli - KAZ Appraisals, LLC, we know when property values have risen or declined. We're experts at analyzing value trends in Nokesville, Prince William County and surrounding areas. Faced with figures from an appraiser, the mortgage company will most often do away with the PMI with little trouble. At which time, the homeowner can relish 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