Have equity in your home? Want a lower payment? An appraisal from Crescent Appraisal Group, Inc. can help you get rid of your PMI.

When purchasing a home, a 20% down payment is usually the standard. The lender's liability is often only the difference between the home value and the sum remaining on the loan, so the 20% adds a nice cushion against the expenses of foreclosure, reselling the home, and natural value changes on the chance that a borrower defaults.

During the recent mortgage boom of the mid 2000s, it became widespread to see lenders taking down payments of 10, 5 or even 0 percent. A lender is able to endure the added risk of the reduced down payment with Private Mortgage Insurance or PMI. This supplemental policy protects the lender in case a borrower is unable to pay on the loan and the market price of the home is less than what is owed on the loan.

PMI is pricey to a borrower in that the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and often isn't even tax deductible. It's profitable for the lender because they obtain the money, and they receive payment if the borrower is unable to pay, contradictory to a piggyback loan where the lender absorbs all the deficits.

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

How can a buyer prevent bearing the expense of PMI?

With the utilization of The Homeowners Protection Act of 1998, on most loans lenders are required to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the primary loan amount. The law designates that, at the request of the home owner, the PMI must be abandoned when the principal amount equals only 80 percent. So, savvy home owners can get off the hook sooner than expected.

Considering it can take countless years to arrive at the point where the principal is just 20% of the original amount borrowed, it's essential to know how your home has grown in value. After all, every bit of appreciation you've obtained over the years counts towards dismissing PMI. So why should you pay it after your loan balance has fallen below the 80% threshold? Even when nationwide trends predict declining home values, realize that real estate is local. Your neighborhood may not be adopting the national trends and/or your home may have secured equity before things cooled off.

The difficult thing for most home owners to know is just when their home's equity goes over the 20% point. An accredited, licensed real estate appraiser can definitely help. As appraisers, it's our job to know the market dynamics of our area. At Crescent Appraisal Group, Inc., we know when property values have risen or declined. We're experts at analyzing value trends in Metairie, Jefferson County and surrounding areas. When faced with data from an appraiser, the mortgage company will most often drop the PMI with little anxiety. 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