Let Phoenix Valuations, LLC help you figure out if you can cancel your PMI

It's typically known that a 20% down payment is accepted when purchasing a home. Considering the risk for the lender is usually only the difference between the home value and the sum due on the loan, the 20% adds a nice cushion against the charges of foreclosure, selling the home again, and natural value changeson the chance that a borrower defaults.

Banks were accepting down payments down to 10, 5 and even 0 percent in the peak of last decade's mortgage boom. A lender is able to handle the additional risk of the low down payment with Private Mortgage Insurance or PMI. PMI covers the lender if a borrower doesn't pay on the loan and the worth of the house is lower than what the borrower still owes on the loan.

PMI can be costly to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and frequently isn't even tax deductible. Separate from a piggyback loan where the lender consumes all the damages, PMI is profitable for the lender because they collect the money, and they get the money if the borrower defaults.

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

How home owners can avoid bearing the expense of PMI

The Homeowners Protection Act of 1998 forces the lenders on nearly all loans to automatically stop the PMI when the principal balance of the loan reaches 78 percent of the initial loan amount. Acute home owners can get off the hook a little earlier. The law stipulates that, upon request of the home owner, the PMI must be dropped when the principal amount reaches only 80 percent.

Since it can take countless years to arrive at the point where the principal is just 20% of the original loan amount, it's crucial to know how your home has increased in value. After all, any appreciation you've acquired over time counts towards abolishing PMI. So why pay it after your loan balance has fallen below the 80% threshold? Despite the fact that nationwide trends signify plunging home values, be aware that real estate is local. Your neighborhood might not be reflecting the national trends and/or your home could have acquired equity before things simmered down.

The toughest thing for almost all homeowners to understand is just when their home's equity rises above the 20% point. A certified, licensed real estate appraiser can surely help. As appraisers, it's our job to keep up with the market dynamics of our area. At Phoenix Valuations, LLC, we're experts at pinpointing value trends in Scottsdale, Maricopa County and surrounding areas, and we know when property values have risen or declined. When faced with information from an appraiser, the mortgage company will most often drop the PMI with little effort. At that 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