Allatoona Appraisal can help you remove your Private Mortgage Insurance

A 20% down payment is typically accepted when getting a mortgage. The lender's risk is oftentimes only the difference between the home value and the amount remaining on the loan, so the 20% adds a nice cushion against the costs of foreclosure, selling the home again, and natural value variations in the event a borrower defaults.

During the recent mortgage boom that our country recently experienced, it was customary to see lenders only asking for down payments of 10, 5, 3 or sometimes 0 percent. How does a lender manage the additional risk of the low down payment? The solution is Private Mortgage Insurance or PMI. This supplemental plan guards the lender in case a borrower doesn't pay on the loan and the market price of the home is lower than the balance of the loan.

PMI can be expensive to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is rolled into the mortgage payment and often isn't even tax deductible. As opposed to a piggyback loan where the lender consumes all the losses, PMI is favorable for the lender because they acquire the money, and they are covered if the borrower is unable to pay.


Did you secure your mortgage with less than 20% down? Contact Allatoona Appraisal today at 678-574-0222 to see if you can cancel your Private Mortgage Insurance premium.

How can buyers avoid bearing the expense of PMI?

The Homeowners Protection Act of 1998 forces 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. The law pledges that, upon request of the homeowner, the PMI must be dropped when the principal amount reaches just 80 percent. So, keen homeowners can get off the hook a little earlier.

Since it can take several years to arrive at the point where the principal is only 80% of the initial amount borrowed, it's important to know how your Georgia home has appreciated in value. After all, all of the appreciation you've accomplished over the years counts towards dismissing PMI. So what's the reason for paying it after your loan balance has dropped below the 80% mark? Even when nationwide trends hint at lower overall home values, understand that real estate is local. Your neighborhood may not be heeding the national trends and/or your home might have acquired equity before things simmered down.

The difficult thing for many homeowners to figure out is just when their home's equity goes over the 20% point. An accredited, Georgia licensed real estate appraiser can certainly help. Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job! At Allatoona Appraisal, we know when property values have risen or declined. We're masters at identifying value trends in Kennesaw, Cobb County, and surrounding areas. When faced with information from an appraiser, the mortgage company will most often cancel the PMI with little trouble. At which time, the homeowner can enjoy the savings from that point on.


Did you secure your mortgage with less than 20% down? Contact Allatoona Appraisal today at 678-574-0222 to see if you can get rid of your Private Mortgage Insurance payment.

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