Have equity in your home? Want a lower payment? An appraisal from R & R Real Estate Solutions can help you get rid of your PMI.

A 20% down payment is usually the standard when purchasing a home. Since the liability for the lender is often only the remainder between the home value and the amount remaining on the loan, the 20% supplies a nice buffer against the costs of foreclosure, reselling the home, and natural value variationson the chance that a borrower defaults.


The market was working with down payments down to 10, 5 and even 0 percent in the peak of last decade's mortgage boom. A lender is able to manage the additional risk of the low down payment with Private Mortgage Insurance or PMI. PMI takes care of the lender if a borrower doesn't pay on the loan and the market price of the house is lower than the loan balance.


Because the $40-$50 a month per $100,000 borrowed is rolled into the mortgage payment and many times isn't even tax deductible, PMI can be costly to a borrower. It's lucrative for the lender because they obtain the money, and they receive payment if the borrower defaults, contradictory to a piggyback loan where the lender takes in all the damages.

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

How can homebuyers keep from bearing the expense of PMI?

The Homeowners Protection Act of 1998 obligates the lenders on nearly all loans to automatically eliminate the PMI when the principal balance of the loan reaches 78 percent of the original loan amount. The law designates that, upon request of the homeowner, the PMI must be abandoned when the principal amount equals just 80 percent. So, wise home owners can get off the hook a little earlier.


Because it can take many years to reach the point where the principal is only 20% of the initial loan amount, it's necessary to know how your home has appreciated in value. After all, every bit of appreciation you've gained over time counts towards dismissing PMI. So why should you pay it after the balance of your loan has fallen below the 80% threshold? Your neighborhood may not be following the national trends and/or your home might have acquired equity before things simmered down, so even when nationwide trends hint at declining home values, you should realize that real estate is local.


The hardest thing for almost all home owners to understand is just when their home's equity goes over the 20% point. A certified, licensed real estate appraiser can surely help. As appraisers, it's our job to understand the market dynamics of our area. At R & R Real Estate Solutions, we're experts at pinpointing value trends in La Vernia, Wilson County and surrounding areas, and we know when property values have risen or declined. Faced with information from an appraiser, the mortgage company will most often remove the PMI with little anxiety. 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

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