Let Lake Area Appraisal Firm help you discover if you can eliminate your PMIWhen getting a mortgage, a 20% down payment is typically the standard. The lender's risk is usually only the remainder between the home value and the amount due on the loan, so the 20% provides a nice cushion against the expenses of foreclosure, selling the home again, and regular value fluctuations on the chance that a borrower defaults. Banks were working with down payments down to 10, 5 and often 0 percent during the mortgage boom of the mid 2000s. 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 case a borrower is unable to pay on the loan and the value of the home is lower than the loan balance. Since the $40-$50 a month per $100,000 borrowed is rolled into the mortgage payment and often isn't even tax deductible, PMI can be pricey to a borrower. Opposite from a piggyback loan where the lender absorbs all the costs, PMI is money-making for the lender because they secure 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 can home buyers avoid paying PMI?With the utilization of The Homeowners Protection Act of 1998, on nearly all loans lenders are forced to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the initial loan amount. Smart homeowners can get off the hook a little earlier. The law stipulates that, upon request of the homeowner, the PMI must be released when the principal amount equals just 80 percent. Considering it can take many years to get to the point where the principal is only 20% of the initial amount of the loan, it's important to know how your home has appreciated in value. After all, all of the appreciation you've acquired over time counts towards dismissing PMI. So why should you pay it after the balance of your loan has dropped below the 80% mark? Despite the fact that nationwide trends hint at plummeting home values, understand that real estate is local. Your neighborhood may not be heeding the national trends and/or your home may have gained equity before things settled down. 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. As appraisers, it's our job to recognize the market dynamics of our area. At Lake Area Appraisal Firm, we are masters at identifying value trends in LAKE CHARLES, Calcasieu Parish and surrounding areas, and we know when property values have risen or declined. Faced with information from an appraiser, the mortgage company will usually drop the PMI with little trouble. At which time, the homeowner can retain the savings from that point on.
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