Have equity in your home? Want a lower payment? An appraisal from Lenders Appraisal Service, Inc. can help you get rid of your PMI.

When buying a house, a 20% down payment is usually the standard. Because the liability for the lender is usually only the difference between the home value and the sum remaining on the loan, the 20% provides a nice cushion against the costs of foreclosure, selling the home again, and regular value fluctuations on the chance that a borrower is unable to pay.

The market was taking down payments discounted to 10, 5 and often 0 percent in the peak of last decade's mortgage boom. How does a lender manage the additional risk of the small down payment? The answer is Private Mortgage Insurance or PMI. PMI takes care of the lender in case a borrower doesn't pay on the loan and the value of the property is lower than the loan balance.

PMI can be costly to a borrower in that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and frequently isn't even tax deductible. It's advantageous for the lender because they collect the money, and they are covered if the borrower defaults, separate from a piggyback loan where the lender consumes all the damages.

Has your home value appreciated since you first purchased? Call Lenders Appraisal Service, Inc. today at (612) 240-2535. You may be able to get rid of your Private Mortgage Insurance premium.

How can homebuyers prevent paying PMI?

The Homeowners Protection Act of 1998 requires the lenders on most loans to automatically stop the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount. Wise home owners can get off the hook a little early. The law designates that, at the request of the home owner, the PMI must be abandoned when the principal amount reaches just 80 percent.

Considering it can take several years to reach the point where the principal is just 80% of the original amount of the loan, it's essential to know how your Minnesota home has increased in value. After all, all of the appreciation you've gained over the years counts towards abolishing PMI. So what's the reason for paying it after the balance of your loan has dropped below the 80% mark? Even when nationwide trends signify falling home values, be aware that real estate is local. Your neighborhood might not be heeding the national trends and/or your home may have acquired equity before things declined.

The toughest thing for most people 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 know the market dynamics of our area. At Lenders Appraisal Service, Inc., we know when property values have risen or declined. We're experts at recognizing value trends in Saint Paul, Dakota County, and surrounding areas. When faced with information from an appraiser, the mortgage company will most often drop the PMI with little effort. At that time, the homeowner can enjoy the savings from that point on.

Is PMI a part of your monthly house payment? Call Lenders Appraisal Service, Inc. today at (612) 240-2535 or send us an e-mail. Documentation of your home's present value could save you thousands.

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


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