Have equity in your home? Want a lower payment? An appraisal from KEY INSIGHT can help you get rid of your PMI.

A 20% down payment is usually the standard when buying a house. Because the risk for the lender is generally only the difference between the home value and the sum due on the loan, the 20% provides a nice buffer against the expenses of foreclosure, reselling the home, and regular value changeson the chance that a purchaser doesn't pay.

During the recent mortgage boom of the mid 2000s, it was widespread to see lenders requiring down payments of 10, 5 or sometimes 0 percent. How does a lender handle the added risk of the low down payment? The answer is Private Mortgage Insurance or PMI. This added policy protects the lender if a borrower defaults on the loan and the value of the house is less than the loan balance.

PMI can be expensive to a borrower in that the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and many times isn't even tax deductible. It's advantageous for the lender because they collect the money, and they get paid if the borrower defaults, opposite from a piggyback loan where the lender consumes 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 home owners prevent bearing the expense of PMI?

The Homeowners Protection Act of 1998 forces the lenders on nearly all loans to automatically terminate the PMI when the principal balance of the loan reaches 78 percent of the primary loan amount. Acute home owners can get off the hook a little early. The law states that, at the request of the homeowner, the PMI must be dropped when the principal amount equals only 80 percent.

It can take countless years to reach the point where the principal is only 20% of the original loan amount, so it's important to know how your home has increased in value. After all, all of the appreciation you've acquired over the years counts towards dismissing PMI. So what's the reason for paying it after the balance of your loan has fallen below the 80% threshold? Despite the fact that nationwide trends signify falling home values, realize that real estate is local. Your neighborhood might not be following the national trends and/or your home might have gained equity before things simmered down.

The difficult thing for many homeowners to understand is just when their home's equity rises above the 20% point. An accredited, licensed real estate appraiser can surely help. It's an appraiser's job to know the market dynamics of their area. At KEY INSIGHT, we know when property values have risen or declined. We're experts at determining value trends in Rhinelander, Oneida County and surrounding areas. Faced with information from an appraiser, the mortgage company will most often drop the PMI with little anxiety. At which time, the homeowner 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