Let Robert J. Nelson, SRA help you decide if you can cancel your PMIIt's typically inferred that a 20% down payment is accepted when buying a house. Because the risk for the lender is usually only the remainder between the home value and the sum due on the loan, the 20% adds a nice buffer against the charges of foreclosure, reselling the home, and regular value changesin the event a borrower doesn't pay. During the recent mortgage boom of the last decade, it became common to see lenders taking down payments of 10, 5 or often 0 percent. How does a lender manage the additional risk of the low down payment? The solution is Private Mortgage Insurance or PMI. This additional policy takes care of the lender if a borrower is unable to pay on the loan and the market price of the home is less than what the borrower still owes on the loan. PMI can be pricey to a borrower in that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and generally isn't even tax deductible. Separate from a piggyback loan where the lender consumes all the losses, PMI is advantageous for the lender because they collect the money, and they get the money if the borrower is unable to pay. 
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How home buyers can keep from bearing the cost of PMIWith the utilization of The Homeowners Protection Act of 1998, on nearly all loans lenders are obligated to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the initial loan amount. Keen homeowners can get off the hook sooner than expected. The law promises that, upon request of the homeowner, the PMI must be released when the principal amount equals just 80 percent. Since it can take many years to reach the point where the principal is only 20% of the original amount borrowed, it's crucial to know how your home has increased in value. After all, every bit of appreciation you've acquired over time counts towards abolishing PMI. So why should you pay it after the balance of your loan has fallen below the 80% threshold? Your neighborhood might not be adhering to the national trends and/or your home could have secured equity before things settled down, so even when nationwide trends indicate declining home values, you should understand that real estate is local. The difficult thing for many homeowners to understand is just when their home's equity rises above the 20% point. A certified, licensed real estate appraiser can certainly help. As appraisers, it's our job to keep up with the market dynamics of our area. At Robert J. Nelson, SRA, we know when property values have risen or declined. We're masters at identifying value trends in Loveland, Hamilton County and surrounding areas. When faced with figures from an appraiser, the mortgage company will generally cancel the PMI with little effort. At that time, the home owner can delight in the savings from that point on.
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