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Barnes Appraisal Company can help you remove your Private Mortgage Insurance

A 20% down payment is usually accepted when buying a house. Because the risk for the lender is generally only the difference between the home value and the amount outstanding on the loan, the 20% supplies a nice cushion against the charges of foreclosure, selling the home again, and natural value fluctuationson the chance that a purchaser defaults.

The market was working with down payments down to 10, 5 and even 0 percent during the mortgage boom of the last decade. How does a lender manage the added risk of the small down payment? The answer is Private Mortgage Insurance or PMI. This supplementary plan protects the lender in case a borrower defaults on the loan and the worth of the property is less than the balance of 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 payment and often isn't even tax deductible. Different from a piggyback loan where the lender takes in all the costs, PMI is advantageous for the lender because they obtain the money, and they get paid 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 can home buyers prevent paying PMI?

The Homeowners Protection Act of 1998 forces the lenders on nearly all loans to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the original loan amount. The law promises that, at the request of the homeowner, the PMI must be released when the principal amount equals just 80 percent. So, acute homeowners can get off the hook ahead of time.

It can take many years to arrive at the point where the principal is just 20% of the initial amount of the loan, so it's important to know how your home has grown in value. After all, every bit of appreciation you've gained over time counts towards abolishing PMI. So why pay it after your loan balance has dropped below the 80% mark? Even when nationwide trends hint at decreasing home values, understand that real estate is local. Your neighborhood might not be reflecting the national trends and/or your home may have secured equity before things simmered down.

The hardest thing for most homeowners to know is just when their home's equity rises above the 20% point. A certified, licensed real estate appraiser can definitely help. It is an appraiser's job to know the market dynamics of their area. At Barnes Appraisal Company, we know when property values have risen or declined. We're experts at determining value trends in Lawton, Comanche County and surrounding areas. When faced with figures from an appraiser, the mortgage company will usually drop the PMI with little effort. At which time, the home owner can enjoy 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