Let Di Cicco & Associates help you learn if you can get rid of your PMIA 20% down payment is typically accepted when buying a house. Because the liability for the lender is often only the difference between the home value and the sum due on the loan, the 20% adds a nice cushion against the costs of foreclosure, reselling the home, and natural value variationsin the event a purchaser doesn't pay. Lenders were accepting down payments down to 10, 5 and even 0 percent during the mortgage boom of the mid 2000s. How does a lender handle the additional risk of the low down payment? The answer is Private Mortgage Insurance or PMI. This supplementary policy guards the lender if a borrower is unable to pay on the loan and the market price of the property is less than the balance of the loan. Since the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and often isn't even tax deductible, PMI is costly to a borrower. It's beneficial for the lender because they collect the money, and they get the money if the borrower doesn't pay, separate 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 can home buyers prevent bearing the expense of PMI?The Homeowners Protection Act of 1998 obligates the lenders on most loans to automatically cease the PMI when the principal balance of the loan equals 78 percent of the original loan amount. Smart home owners can get off the hook beforehand. The law designates that, upon request of the home owner, the PMI must be abandoned when the principal amount equals just 80 percent. Because it can take countless years to reach the point where the principal is only 20% of the original amount borrowed, it's necessary to know how your home has appreciated in value. After all, every bit of appreciation you've accomplished over the years counts towards abolishing PMI. So what's the reason for paying it after your loan balance has dropped below the 80% mark? Your neighborhood may not be following the national trends and/or your home could have acquired equity before things simmered down, so even when nationwide trends forecast declining home values, you should understand that real estate is local. The hardest thing for almost all home owners to understand is just when their home's equity goes over the 20% point. A certified, licensed real estate appraiser can definitely help. It's an appraiser's job to understand the market dynamics of their area. At Di Cicco & Associates, we know when property values have risen or declined. We're masters at pinpointing value trends in Palm Beach Garden, Palm Beach County and surrounding areas. Faced with figures from an appraiser, the mortgage company will generally eliminate the PMI with little anxiety. At that time, the home owner can relish the savings from that point on.
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