Have equity in your home? Want a lower payment? An appraisal from CMJ Appraisals & Investments LLC can help you get rid of your PMI.

A 20% down payment is typically accepted when purchasing a home. The lender's risk is usually only the difference between the home value and the amount remaining on the loan, so the 20% adds a nice cushion against the expenses of foreclosure, reselling the home, and natural value variations on the chance that a purchaser doesn't pay.

During the recent mortgage boom of the mid 2000s, it became customary to see lenders taking down payments of 10, 5 or even 0 percent. A lender is able to handle the additional risk of the reduced down payment with Private Mortgage Insurance or PMI. PMI protects the lender in the event a borrower defaults on the loan and the worth of the home is less than the balance of the loan.

Since the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and often isn't even tax deductible, PMI can be pricey to a borrower. Contradictory to a piggyback loan where the lender consumes all the costs, PMI is beneficial for the lender because they acquire the money, and they get the money 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 a homebuyer keep from paying PMI?

With the implementation of The Homeowners Protection Act of 1998, on most loans lenders are obligated to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the primary loan amount. Acute home owners can get off the hook a little earlier. The law stipulates that, upon request of the home owner, the PMI must be released when the principal amount reaches just 80 percent.

Because it can take countless years to arrive at the point where the principal is only 20% of the initial amount borrowed, it's crucial to know how your home has increased in value. After all, any appreciation you've accomplished over the years counts towards abolishing PMI. So why pay it after your loan balance has fallen below the 80% mark? Even when nationwide trends predict plunging home values, realize that real estate is local. Your neighborhood may not be minding the national trends and/or your home might have gained equity before things calmed down.

The difficult thing for most home owners to understand is just when their home's equity goes over the 20% point. An accredited, licensed real estate appraiser can definitely help. It is an appraiser's job to recognize the market dynamics of their area. At CMJ Appraisals & Investments LLC, we know when property values have risen or declined. We're masters at pinpointing value trends in Smyrna, Cobb County and surrounding areas. Faced with data from an appraiser, the mortgage company will usually remove the PMI with little anxiety. At that time, the home owner can relish 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