Let Allatoona Appraisal help you discover if you can eliminate your PMI

It's generally known that a 20% down payment is common when buying a house. Because the liability for the lender is usually only the remainder between the home value and the sum outstanding on the loan, the 20% provides a nice cushion against the charges of foreclosure, selling the home again, and natural value variations in the event a borrower defaults.

During the recent mortgage boom of the last decade, it became common to see lenders reducing down payments to 10, 5, 3 or often 0 percent. How does a lender endure the added risk of the small down payment? The answer is Private Mortgage Insurance or PMI. This supplementary plan protects the lender if a borrower is unable to pay on the loan and the market price of the home is lower than what the borrower still owes on the loan.

PMI can be expensive to a borrower because the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and oftentimes isn't even tax deductible. Different from a piggyback loan where the lender absorbs all the deficits, PMI is lucrative for the lender because they collect the money, and they get paid if the borrower doesn't 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 current value could save you thousands.

How home buyers can keep from bearing the cost of PMI

The Homeowners Protection Act of 1998 makes the lenders on most loans to automatically cease the PMI when the principal balance of the loan equals 78 percent of the original loan amount. The law promises that, at the request of the homeowner, the PMI must be released when the principal amount equals only 80 percent. So, wise homeowners can get off the hook a little earlier.

It can take a significant number of years to get to the point where the principal is just 80% of the initial amount borrowed, so it's crucial to know how your Georgia home has grown in value. After all, every bit of appreciation you've achieved over the years counts towards abolishing PMI. So what's the reason for paying it after the balance of your loan has dropped below the 80% threshold? Your neighborhood may not follow national trends and/or your home could have gained equity before the economy declined. So even when nationwide trends forecast falling home values, you should understand that real estate is local.

The toughest thing for many people to figure out is whether their home equity has exceeded the 20% point. A certified, Georgia licensed real estate appraiser can surely help. It is an appraiser's job to understand the market dynamics of their area. At Allatoona Appraisal, we're experts at recognizing 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 often drop the PMI with little trouble. At which time, the homeowner can relish the savings from that point on.


The savings from getting rid of the PMI required when you got your mortgage will make up for the cost of the appraisal in a matter of months. Allatoona Appraisal are experts when it comes to real estate value trends in Kennesaw and Cobb County. Contact us today.

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