Let Lenders Appraisal Service, Inc. help you figure out if you can eliminate your PMI

It's widely understood that a 20% down payment is common when buying a house. Because the risk for the lender is oftentimes only the difference between the home value and the sum due on the loan, the 20% supplies a nice cushion against the charges of foreclosure, reselling the home, and regular value variations in the event a borrower doesn't pay.

During the recent mortgage boom of the last decade, it was customary to see lenders reducing down payments to 10, 5, 3 or sometimes 0 percent. A lender is able to endure the additional risk of the reduced down payment with Private Mortgage Insurance or PMI. This supplementary plan covers the lender in the event a borrower is unable to pay on the loan and the market price of the property is lower than what is owed on the loan.

Since the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and often isn't even tax deductible, PMI is pricey to a borrower. As opposed to a piggyback loan where the lender absorbs all the costs, PMI is money-making for the lender because they obtain the money, and they receive payment if the borrower defaults.


The amount you keep from cancelling your PMI will make up for the cost of the appraisal in no time. Lenders Appraisal Service, Inc. are experts when it comes to value trends in the city of Saint Paul and Dakota County. Contact us today.

How can a home buyer prevent paying PMI?

The Homeowners Protection Act of 1998 obligates the lenders on the majority of loans to automatically terminate the PMI when the principal balance of the loan equals 78 percent of the primary loan amount. Smart homeowners can get off the hook a little early. The law promises that, upon request of the home owner, the PMI must be abandoned when the principal amount equals just 80 percent.

It can take many years to get to the point where the principal is only 80% of the original amount of the loan, so it's necessary to know how your Minnesota home has appreciated in value. After all, any appreciation you've achieved over the years counts towards dismissing PMI. So why should you pay it after the balance of your loan has dropped below the 80% threshold? Even when nationwide trends predict declining home values, be aware that real estate is local. Your neighborhood might not be following the national trends and/or your home might have secured equity before things simmered down.

The difficult thing for almost all homeowners to figure out is just when their home's equity goes over the 20% point. An accredited, Minnesota licensed real estate appraiser can definitely help. As appraisers, it's our job to keep up with the market dynamics of our area. At Lenders Appraisal Service, Inc., we're masters at recognizing value trends in Saint Paul, Dakota County, and surrounding areas, and we know when property values have risen or declined. Faced with figures from an appraiser, the mortgage company will usually eliminate the PMI with little anxiety. At that time, the homeowner can relish the savings from that point on.


The money you keep from getting rid of the PMI required when you got your mortgage will make up for the price of the appraisal in a matter of months. Nobody is more qualified than Lenders Appraisal Service, Inc. when it comes to appreciating values in Saint Paul and Dakota County. Contact us today.

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

 

Home Status Report

Want to know if a home is still on the market, or if the price has changed? We can help. Simply fill out the information below and with no obligation to you we'll get back to you with your requested information. We guarantee your privacy.

Your Information
Property Information