Let Real Estate Valuation Services help you decide if you can get rid of your PMI

It's largely understood that a 20% down payment is accepted when getting a mortgage. The lender's only exposure is typically just the difference between the home value and the amount outstanding on the loan, so the 20% supplies a nice buffer against the expenses of foreclosure, selling the home again, and natural value fluctuations in the event a purchaser defaults.

Banks were working with down payments as low as 10, 5 and frequently 0 percent in the peak of last decade's mortgage boom. How does a lender endure the increased risk of the low down payment? The solution is Private Mortgage Insurance or PMI. This added plan guards the lender if a borrower doesn't pay on the loan and the market price of the house is lower than the loan balance.

Since the $40-$50 a month per $100,000 borrowed is rolled into the mortgage payment and on many occasions isn't even tax deductible, PMI can be expensive to a borrower. Different from a piggyback loan where the lender absorbs all the costs, PMI is money-making for the lender because they collect the money, and they get the money if the borrower doesn't pay.


	Does your monthly loan payment have a lineitem for PMI? Call Real Estate Valuation Services today at (804) 608-8343 or send us an e-mail. Documentation of your home's current value could save you thousands.

How can a home buyer keep from bearing the cost of PMI?

With the passage of The Homeowners Protection Act of 1998, lenders are obligated to automatically terminate the PMI when the principal balance of the loan equals 78 percent of the primary loan amount on most loans. The law promises that, upon request of the homeowner, the PMI must be abandoned when the principal amount reaches only 80 percent. So, keen home owners can get off the hook ahead of time.

Considering it can take a significant number of years to get to the point where the principal is only 80% of the initial amount borrowed, it's necessary to know how your Virginia home has appreciated in value. After all, all of the appreciation you've gained over time counts towards removing PMI. So what's the reason for paying it after the balance of your loan has dropped below the 80% mark? Your neighborhood might not conform to national trends and/or your home may have secured equity before the economy simmered down. So even when nationwide trends indicate falling home values, you should realize that real estate is local.

A certified, Virginia licensed real estate appraiser can help homeowners figure out if their equity has made it to the 20% point, as it's a tough thing to know. It's an appraiser's job to keep up with the market dynamics of their area. At Real Estate Valuation Services, we know when property values have risen or declined. We're masters at recognizing value trends in Midlothian, Chesterfield County, and surrounding areas. When faced with figures from an appraiser, the mortgage company will usually eliminate the PMI with little trouble. At which time, the home owner can retain the savings from that point on.


	The savings from getting rid of the PMI required when you got your mortgage pays for the appraisal in no time. Nobody is more qualified than Real Estate Valuation Services when it comes to appreciating values in Midlothian and Chesterfield 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