Lewis Appraisals can help you remove your Private Mortgage Insurance

A 20% down payment is usually the standard when purchasing a home. The lender's liability is oftentimes only the difference between the home value and the amount outstanding on the loan, so the 20% supplies a nice buffer against the costs of foreclosure, reselling the home, and natural value fluctuations on the chance that a borrower defaults.

The market was taking down payments as low as 10, 5 and often 0 percent in the peak of last decade's mortgage boom. A lender is able to endure the additional risk of the small down payment with Private Mortgage Insurance or PMI. This supplementary plan protects the lender if a borrower doesn't pay on the loan and the market price of the property is lower than what the borrower still owes on the loan.

Because the $40-$50 a month per $100,000 borrowed is lumped into the mortgage monthly payment and oftentimes isn't even tax deductible, PMI is costly to a borrower. Instead of a piggyback loan where the lender consumes all the costs, PMI is beneficial for the lender because they secure the money, and they get paid if the borrower doesn't pay.


	Does your monthly loan payment include a fee PMI? Call Lewis Appraisals today at 336-499-4436 or send us an e-mail. A new appraisal could save you thousands.

How can a homebuyer keep from bearing the cost of PMI?

The Homeowners Protection Act of 1998 forces the lenders on most loans to automatically eliminate the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount. The law states that, at the request of the homeowner, the PMI must be dropped when the principal amount equals just 80 percent. So, savvy home owners can get off the hook a little early.

It can take many years to get to the point where the principal is just 80% of the initial loan amount, so it's important to know how your North Carolina home has appreciated in value. After all, all of the appreciation you've achieved over the years counts towards dismissing PMI. So what's the reason for paying it after the balance of your loan has dropped below the 80% mark? Even when nationwide trends hint at declining home values, be aware that real estate is local. Your neighborhood may not be reflecting the national trends and/or your home may have gained equity before things simmered down.

The hardest thing for almost all homeowners to figure out is just when their home's equity rises above the 20% point. A certified, North Carolina licensed real estate appraiser can certainly help. Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job! At Lewis Appraisals, we're masters at pinpointing value trends in Ararat, Surry County, and surrounding areas, and we know when property values have risen or declined. Faced with information from an appraiser, the mortgage company will generally remove the PMI with little anxiety. At that time, the home owner can relish the savings from that point on.


	Does your monthly mortgage payment include a fee for PMI? Call Lewis Appraisals today at 336-499-4436 or send us an e-mail. A new appraisal could save you thousands.

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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