Have equity in your home? Want a lower payment? An appraisal from Jordan Services can help you get rid of your PMI.

It's widely known that a 20% down payment is common when buying a house. Considering the liability for the lender is often only the remainder between the home value and the amount remaining on the loan, the 20% provides a nice buffer against the costs of foreclosure, selling the home again, and regular value changeson the chance that a borrower doesn't pay.

The market was taking down payments down to 10, 5 and even 0 percent in the peak of last decade's mortgage boom. How does a lender handle the increased risk of the low down payment? The solution is Private Mortgage Insurance or PMI. PMI protects the lender in the event a borrower defaults on the loan and the value of the house is lower than what is owed on the loan.

PMI can be expensive to a borrower because the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and often isn't even tax deductible. It's profitable for the lender because they obtain the money, and they receive payment if the borrower defaults, different from a piggyback loan where the lender consumes all the costs.

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

How homeowners can refrain from paying PMI

With the utilization of The Homeowners Protection Act of 1998, on most loans lenders are obligated to automatically stop the PMI when the principal balance of the loan reaches 78 percent of the initial loan amount. Acute homeowners can get off the hook a little earlier. The law pledges that, at the request of the home owner, the PMI must be dropped when the principal amount equals just 80 percent.

It can take many years to reach the point where the principal is just 20% of the initial amount of the loan, so it's crucial to know how your home has increased in value. After all, all of the appreciation you've gained over time counts towards abolishing PMI. So what's the reason for paying it after the balance of your loan has dropped below the 80% mark? Despite the fact that nationwide trends hint at plunging home values, be aware that real estate is local. Your neighborhood might not be following the national trends and/or your home may have gained equity before things calmed down.

The difficult thing for many 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 keep up with the market dynamics of our area. At Jordan Services, we know when property values have risen or declined. We're masters at pinpointing value trends in Lufkin, Angelina County and surrounding areas. When faced with data from an appraiser, the mortgage company will most often eliminate the PMI with little anxiety. At that 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