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

It's widely understood that a 20% down payment is the standard when getting a mortgage. Considering the liability for the lender is generally only the difference between the home value and the sum outstanding on the loan, the 20% adds a nice buffer against the charges of foreclosure, selling the home again, and regular value fluctuationsin the event a borrower is unable to pay.

The market was accepting down payments down to 10, 5 and often 0 percent during the mortgage boom of the last decade. How does a lender handle the increased risk of the low down payment? The answer is Private Mortgage Insurance or PMI. This supplementary policy takes care of the lender if a borrower defaults on the loan and the worth 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 lumped into the mortgage monthly payment and frequently isn't even tax deductible. Unlike a piggyback loan where the lender consumes all the costs, PMI is lucrative for the lender because they obtain the money, and they receive payment 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 homebuyers can prevent bearing the cost of PMI

The Homeowners Protection Act of 1998 makes the lenders on nearly all loans to automatically cancel the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount. The law designates that, at the request of the home owner, the PMI must be dropped when the principal amount equals just 80 percent. So, savvy home owners can get off the hook ahead of time.

Considering it can take countless years to get to the point where the principal is only 20% of the initial amount borrowed, it's essential to know how your home has grown in value. After all, every bit of appreciation you've acquired over time counts towards dismissing PMI. So why pay it after your loan balance has fallen below the 80% threshold? Your neighborhood may not be reflecting the national trends and/or your home might have secured equity before things settled down, so even when nationwide trends indicate 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 goes over the 20% point, as it's a tough thing to know. It's an appraiser's job to recognize the market dynamics of their area. At Wronski Appraisal Services Inc., we're masters at determining value trends in Scottsdale, Maricopa County and surrounding areas, and we know when property values have risen or declined. Faced with information from an appraiser, the mortgage company will often eliminate the PMI with little effort. At that time, the homeowner can delight in 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