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Northern Arizona Appraisal, Inc. can help you remove your Private Mortgage Insurance

When getting a mortgage, a 20% down payment is usually the standard. Because the risk for the lender is usually only the difference between the home value and the sum outstanding on the loan, the 20% adds a nice buffer against the costs of foreclosure, reselling the home, and natural value fluctuationsin the event a borrower defaults.

During the recent mortgage upturn of the mid 2000s, it became common to see lenders taking down payments of 10, 5 or often 0 percent. A lender is able to endure the additional risk of the minimal down payment with Private Mortgage Insurance or PMI. PMI protects the lender if a borrower defaults on the loan and the worth of the property is lower than what is owed on the loan.

PMI can be pricey to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage monthly payment and oftentimes isn't even tax deductible. Unlike a piggyback loan where the lender takes in all the deficits, PMI is beneficial for the lender because they collect the money, and they receive payment 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 can a homeowner prevent bearing the cost of PMI?

The Homeowners Protection Act of 1998 obligates the lenders on most loans to automatically cease the PMI when the principal balance of the loan equals 78 percent of the original loan amount. Wise homeowners can get off the hook ahead of time. The law stipulates that, at the request of the home owner, the PMI must be released when the principal amount equals only 80 percent.

Considering it can take countless years to reach the point where the principal is only 20% of the original amount of the loan, it's crucial to know how your home has appreciated in value. After all, any appreciation you've obtained over time counts towards dismissing PMI. So what's the reason for paying it after the balance of your loan has fallen below the 80% mark? Even when nationwide trends signify plummeting home values, realize that real estate is local. Your neighborhood might not be minding the national trends and/or your home may have acquired equity before things settled down.

An accredited, licensed real estate appraiser can help home owners understand just when their home's equity rises above the 20% point, as it's a difficult thing to know. It's an appraiser's job to know the market dynamics of their area. At Northern Arizona Appraisal, Inc., we're masters at recognizing value trends in Phoenix, Maricopa County and surrounding areas, and we know when property values have risen or declined. When faced with figures from an appraiser, the mortgage company will generally eliminate the PMI with little trouble. At that 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