Let Allatoona Appraisal help you determine if you can cancel your PMI

It's largely known that a 20% down payment is accepted when purchasing a home. Since the risk for the lender is often only the remainder between the home value and the amount remaining on the loan, the 20% provides a nice buffer against the charges of foreclosure, reselling the home, and regular value variations on the chance that a borrower is unable to pay.

The market was working with down payments discounted to 10, 5 and even 0 percent during the mortgage boom of the last decade. A lender is able to handle the increased risk of the small down payment with Private Mortgage Insurance or PMI. This supplementary plan guards the lender if a borrower is unable to pay on the loan and the value of the home is less than the loan balance.

PMI can be pricey to a borrower because the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and often isn't even tax deductible. As opposed to a piggyback loan where the lender absorbs all the deficits, PMI is lucrative for the lender because they obtain the money, and they get paid if the borrower doesn't pay.


Has your real estate appreciated since you first purchased? Call Allatoona Appraisal today at 678-574-0222. You may be able to get rid of your Private Mortgage Insurance payment.

How can a home owner refrain from bearing the expense of PMI?

As a result of The Homeowners Protection Act of 1998, lenders are obligated to automatically cease the PMI when the principal balance of the loan equals 78 percent of the original loan amount on most loans. Savvy home owners can get off the hook ahead of time. The law guarantees that, upon request of the home owner, the PMI must be released when the principal amount reaches just 80 percent.

It can take a significant number of years to arrive at the point where the principal is only 80% of the initial amount borrowed, so it's essential to know how your Georgia home has grown in value. After all, any appreciation you've obtained over time counts towards abolishing PMI. So why should you pay it after the balance of your loan has dropped below the 80% mark? Even when nationwide trends indicate lower overall home values, understand that real estate is local. Your neighborhood might not be adopting the national trends and/or your home may have gained equity before things cooled off.

An accredited, Georgia licensed real estate appraiser can help homeowners figure out just when their home's equity goes over the 20% point, as it's a hard thing to know. It is an appraiser's job to recognize the market dynamics of their area. At Allatoona Appraisal, we're experts at determining value trends in Kennesaw, Cobb County, and surrounding areas, and we know when property values have risen or declined. Faced with data from an appraiser, the mortgage company will often remove the PMI with little trouble. At that time, the homeowner can relish the savings from that point on.


Did you have less than 20% to put down on your mortgage? Call Allatoona Appraisal today at 678-574-0222. You may be able to save money by removing your Private Mortgage Insurance premium.

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