Allatoona Appraisal can help you remove your Private Mortgage Insurance

When getting a mortgage, a 20% down payment is typically the standard. Since the risk for the lender is often only the remainder between the home value and the sum due on the loan, the 20% adds a nice cushion against the expenses of foreclosure, reselling the home, and natural value variations on the chance that a borrower defaults.

During the recent mortgage boom of the mid 2000s, it became widespread to see lenders making deals with down payments of 10, 5 or sometimes 0 percent. How does a lender endure the increased risk of the small down payment? The solution is Private Mortgage Insurance or PMI. This supplementary policy covers the lender if a borrower is unable to pay on the loan and the market price of the house is lower than the balance of the loan.

Since the $40-$50 a month per $100,000 borrowed is rolled into the mortgage payment and oftentimes isn't even tax deductible, PMI can be pricey to a borrower. Instead of a piggyback loan where the lender consumes all the damages, PMI is beneficial for the lender because they acquire the money, and they are covered if the borrower is unable to pay.


Is PMI included in your monthly house payment? Call Allatoona Appraisal today at 678-574-0222 or send us an e-mail. Documentation of your home's present value could save you thousands.

How homebuyers can avoid bearing the cost of PMI

The Homeowners Protection Act of 1998 forces the lenders on the majority of loans to automatically stop the PMI when the principal balance of the loan reaches 78 percent of the initial loan amount. The law pledges that, at the request of the homeowner, the PMI must be dropped when the principal amount equals just 80 percent. So, acute homeowners can get off the hook a little earlier.

Since it can take several years to get to the point where the principal is only 80% of the initial amount borrowed, it's important to know how your Georgia home has increased in value. After all, every bit of appreciation you've obtained over time counts towards removing PMI. So why should you pay it after the balance of your loan has fallen below the 80% threshold? Your neighborhood may not follow national trends and/or your home may have secured equity before things declined. So even when nationwide trends hint at falling home values, you should realize that real estate is local.

A certified, Georgia licensed real estate appraiser can help home owners figure out if their equity has made it to the 20% point, as it's a hard thing to know. Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job! At Allatoona Appraisal, we're experts at identifying value trends in Kennesaw, Cobb County, and surrounding areas, and we know when property values have risen or declined. When faced with information from an appraiser, the mortgage company will most often drop the PMI with little trouble. At that time, the homeowner can enjoy the savings from that point on.


Did you have less than 20% to put down on your mortgage? Contact 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