Have equity in your home? Want a lower payment? An appraisal from Stanley M. Pack & Company, Inc. can help you get rid of your PMI.

It's largely inferred that a 20% down payment is accepted when buying a house. Since the liability for the lender is usually only the remainder between the home value and the amount outstanding on the loan, the 20% adds a nice buffer against the costs of foreclosure, selling the home again, and regular value changesin the event a borrower is unable to pay.

Banks were taking down payments down to 10, 5 and often 0 percent during the mortgage boom of the last decade. How does a lender endure the increased risk of the low down payment? The answer is Private Mortgage Insurance or PMI. PMI takes care of the lender in case a borrower is unable to pay on the loan and the market price of the house is lower than what the borrower still owes on the loan.

PMI can be expensive to a borrower because the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and frequently isn't even tax deductible. Different from a piggyback loan where the lender absorbs all the damages, PMI is beneficial for the lender because they acquire the money, and they receive payment if the borrower doesn't pay.

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

How can a buyer avoid bearing the expense 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 equals 78 percent of the beginning loan amount. The law pledges that, upon request of the home owner, the PMI must be abandoned when the principal amount reaches only 80 percent. So, acute homeowners can get off the hook a little earlier.

Because it can take countless years to reach the point where the principal is only 20% of the initial loan amount, it's necessary to know how your home has grown in value. After all, every bit of appreciation you've achieved over time counts towards removing PMI. So why should you pay it after your loan balance has fallen below the 80% threshold? Even when nationwide trends forecast decreasing home values, realize that real estate is local. Your neighborhood might not be heeding the national trends and/or your home could have gained equity before things settled down.

The difficult thing for almost all homeowners to understand is just when their home's equity rises above the 20% point. An accredited, licensed real estate appraiser can definitely help. As appraisers, it's our job to keep up with the market dynamics of our area. At Stanley M. Pack & Company, Inc., we know when property values have risen or declined. We're experts at identifying value trends in SPARTANBURG, Spartanburg County and surrounding areas. Faced with figures from an appraiser, the mortgage company will usually cancel the PMI with little anxiety. At that time, the homeowner can retain 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