Let Berry Realty Co., Realtors help you decide if you can eliminate your PMIA 20% down payment is usually the standard when buying a house. Since the liability for the lender is usually only the difference between the home value and the sum outstanding on the loan, the 20% supplies a nice buffer against the costs of foreclosure, selling the home again, and regular value changesin the event a purchaser is unable to pay. Banks were working with down payments as low as 10, 5 and often 0 percent during the mortgage boom of the last decade. A lender is able to manage the increased risk of the small down payment with Private Mortgage Insurance or PMI. This additional policy covers the lender in case a borrower defaults on the loan and the market price of the house is lower than the loan balance. PMI is costly to a borrower because the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and generally isn't even tax deductible. Opposite from a piggyback loan where the lender absorbs all the losses, PMI is profitable for the lender because they obtain the money, and they get paid if the borrower is unable to pay. 
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How can buyers keep from bearing the expense of PMI?The Homeowners Protection Act of 1998 obligates the lenders on nearly all loans to automatically terminate the PMI when the principal balance of the loan equals 78 percent of the initial loan amount. Keen homeowners can get off the hook a little earlier. The law stipulates that, upon request of the home owner, the PMI must be dropped when the principal amount equals only 80 percent. Since it can take many years to get to the point where the principal is just 20% of the initial loan amount, it's important to know how your home has increased in value. After all, every bit of appreciation you've acquired over the years counts towards abolishing PMI. So what's the reason for paying it after your loan balance has fallen below the 80% threshold? Even when nationwide trends indicate plummeting home values, be aware that real estate is local. Your neighborhood may not be adopting the national trends and/or your home might have secured equity before things simmered down. The toughest thing for almost all home owners to know is just when their home's equity rises above the 20% point. A certified, licensed real estate appraiser can certainly help. It's an appraiser's job to keep up with the market dynamics of their area. At Berry Realty Co., Realtors, we're experts at determining value trends in Kansas City, Jackson County and surrounding areas, and we know when property values have risen or declined. Faced with data from an appraiser, the mortgage company will usually cancel the PMI with little trouble. At that time, the home owner can enjoy the savings from that point on.
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