Have equity in your home? Want a lower payment? An appraisal from PSM Appraisals, LLC can help you get rid of your PMI.

When buying a house, a 20% down payment is typically the standard. The lender's risk is often only the remainder between the home value and the amount outstanding on the loan, so the 20% adds a nice cushion against the charges of foreclosure, selling the home again, and regular value changes in the event a purchaser is unable to pay.

During the recent mortgage upturn of the mid 2000s, it became common to see lenders commanding down payments of 10, 5 or often 0 percent. A lender is able to endure the added risk of the minimal down payment with Private Mortgage Insurance or PMI. This supplementary policy takes care of the lender in the event a borrower doesn't pay on the loan and the market price of the house is lower than the balance of the loan.

PMI can be expensive to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and frequently isn't even tax deductible. Separate from a piggyback loan where the lender consumes all the losses, PMI is lucrative for the lender because they acquire the money, and they receive payment if the borrower doesn't pay.

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

How can a home buyer refrain from bearing the cost of PMI?

The Homeowners Protection Act of 1998 forces the lenders on most loans to automatically cancel the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount. Savvy homeowners can get off the hook a little earlier. The law guarantees that, upon request of the home owner, the PMI must be dropped when the principal amount equals just 80 percent.

It can take countless years to get to the point where the principal is just 20% of the initial amount borrowed, so it's important to know how your home has increased in value. After all, any appreciation you've acquired over the years counts towards removing PMI. So why should you pay it after the balance of your loan has fallen below the 80% threshold? Your neighborhood may not be minding the national trends and/or your home might have gained equity before things simmered down, so even when nationwide trends predict plunging home values, you should realize that real estate is local.

The difficult thing for most home owners to understand is just when their home's equity rises above the 20% point. An accredited, licensed real estate appraiser can certainly help. As appraisers, it's our job to keep up with the market dynamics of our area. At PSM Appraisals, LLC, we know when property values have risen or declined. We're masters at analyzing value trends in Babylon, Suffolk County and surrounding areas. Faced with data from an appraiser, the mortgage company will often drop the PMI with little anxiety. At which time, the home owner 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