Acute Dimensions, LLC can help you remove your Private Mortgage Insurance

A 20% down payment is usually accepted when buying a house. Because the risk for the lender is often only the remainder between the home value and the amount outstanding on the loan, the 20% supplies a nice cushion against the expenses of foreclosure, reselling the home, and natural value variationson the chance that a borrower is unable to pay.

The market was taking down payments as low as 10, 5 and even 0 percent during the mortgage boom of the last decade. A lender is able to endure the additional risk of the reduced down payment with Private Mortgage Insurance or PMI. PMI protects the lender if a borrower doesn't pay on the loan and the value of the house is lower than the loan balance.

Since the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and oftentimes isn't even tax deductible, PMI is costly to a borrower. It's favorable for the lender because they collect the money, and they receive payment if the borrower defaults, unlike a piggyback loan where the lender absorbs all the deficits.

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

How can a homeowner refrain from paying PMI?

With the utilization of The Homeowners Protection Act of 1998, on most loans lenders are obligated to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the initial loan amount. Keen home owners can get off the hook sooner than expected. The law designates that, upon request of the homeowner, the PMI must be released when the principal amount reaches only 80 percent.

It can take countless years to reach the point where the principal is just 20% of the original amount borrowed, so it's essential to know how your home has appreciated in value. After all, every bit of appreciation you've gained over time counts towards abolishing PMI. So why should you pay it after your loan balance has fallen below the 80% mark? Your neighborhood might not be adhering to the national trends and/or your home could have acquired equity before things cooled off, so even when nationwide trends signify decreasing home values, you should realize that real estate is local.

The hardest thing for most homeowners to understand is just when their home's equity rises above the 20% point. A certified, licensed real estate appraiser can surely help. As appraisers, it's our job to understand the market dynamics of our area. At Acute Dimensions, LLC, we know when property values have risen or declined. We're experts at determining value trends in Chandler, Maricopa County and surrounding areas. When faced with data from an appraiser, the mortgage company will generally eliminate the PMI with little anxiety. At that time, the home owner can enjoy 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