Have equity in your home? Want a lower payment? An appraisal from Birchwood & Leaf Appraisals can help you get rid of your PMI.When getting a mortgage, a 20% down payment is typically the standard. Because the liability for the lender is often only the remainder between the home value and the amount due on the loan, the 20% supplies a nice buffer against the costs of foreclosure, reselling the home, and typical value changeson the chance that a borrower is unable to pay. The market was accepting down payments down to 10, 5 and even 0 percent during the mortgage boom of the mid 2000s. How does a lender handle the added risk of the small down payment? The answer is Private Mortgage Insurance or PMI. PMI takes care of the lender if a borrower doesn't pay on the loan and the worth of the home is less 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 pricey to a borrower. It's lucrative for the lender because they obtain the money, and they get paid if the borrower doesn't pay, opposite from a piggyback loan where the lender consumes all the losses. 
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How homebuyers can refrain from bearing the cost of PMIWith the implementation of The Homeowners Protection Act of 1998, on most loans lenders are forced to automatically eliminate the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount. The law states that, upon request of the home owner, the PMI must be abandoned when the principal amount reaches only 80 percent. So, smart home owners can get off the hook a little earlier. It can take countless years to reach the point where the principal is only 20% of the initial amount borrowed, so it's important to know how your home has grown in value. After all, all of the appreciation you've accomplished over time counts towards abolishing PMI. So what's the reason for paying it after your loan balance has dropped below the 80% threshold? Your neighborhood might not be adopting the national trends and/or your home might have gained equity before things calmed down, so even when nationwide trends predict decreasing home values, you should understand that real estate is local. A certified, licensed real estate appraiser can help homeowners understand just when their home's equity rises above the 20% point, as it's a tough thing to know. As appraisers, it's our job to understand the market dynamics of our area. At Birchwood & Leaf Appraisals, we know when property values have risen or declined. We're masters at recognizing value trends in Cottage Grove, Washington County and surrounding areas. Faced with figures from an appraiser, the mortgage company will usually do away with the PMI with little anxiety. At that time, the homeowner can relish the savings from that point on.
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