Have equity in your home? Want a lower payment? An appraisal from American Appraisal, Inc. can help you get rid of your PMI.A 20% down payment is typically the standard when purchasing a home. Since the risk for the lender is often only the remainder between the home value and the sum remaining on the loan, the 20% supplies a nice cushion against the costs of foreclosure, reselling the home, and regular value fluctuationsin the event a purchaser is unable to pay. During the recent mortgage boom of the last decade, it became common to see lenders commanding down payments of 10, 5 or often 0 percent. How does a lender endure the increased risk of the small down payment? The solution is Private Mortgage Insurance or PMI. This additional plan protects the lender if a borrower doesn't pay on the loan and the value of the home is lower than the loan balance. Because the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and generally isn't even tax deductible, PMI can be expensive to a borrower. Contradictory to a piggyback loan where the lender absorbs all the costs, PMI is lucrative for the lender because they secure the money, and they get paid if the borrower defaults. 
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How can buyers keep from bearing the cost of PMI?The Homeowners Protection Act of 1998 requires the lenders on nearly all loans to automatically cancel the PMI when the principal balance of the loan reaches 78 percent of the primary loan amount. Wise homeowners can get off the hook a little earlier. The law promises that, upon request of the home owner, the PMI must be dropped when the principal amount reaches only 80 percent. Considering it can take countless years to get to the point where the principal is only 20% of the original loan amount, it's important to know how your home has grown in value. After all, every bit of appreciation you've accomplished over time counts towards removing PMI. So why pay it after the balance of your loan has dropped below the 80% threshold? Even when nationwide trends indicate plummeting home values, be aware that real estate is local. Your neighborhood might not be adopting the national trends and/or your home could have acquired equity before things calmed down. An accredited, licensed real estate appraiser can help home owners understand just when their home's equity rises above the 20% point, as it's a tough thing to know. It is an appraiser's job to keep up with the market dynamics of their area. At American Appraisal, Inc., we're experts at determining value trends in Bakersfield, Kern County and surrounding areas, and we know when property values have risen or declined. Faced with information from an appraiser, the mortgage company will usually drop the PMI with little anxiety. At that time, the homeowner can delight in the savings from that point on.
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