Have equity in your home? Want a lower payment? An appraisal from Tri-County Appraisals can help you get rid of your PMI.

When buying a house, a 20% down payment is usually the standard. Considering the risk for the lender is usually only the remainder between the home value and the sum remaining on the loan, the 20% supplies a nice buffer against the costs of foreclosure, selling the home again, and regular value changeson the chance that a borrower is unable to pay.

The market was working with down payments down to 10, 5 and even 0 percent during the mortgage boom of the last decade. A lender is able to manage the additional risk of the reduced down payment with Private Mortgage Insurance or PMI. This added policy guards the lender in the event a borrower is unable to pay on the loan and the worth of the home is lower than what is owed on the loan.

Since the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and many times isn't even tax deductible, PMI can be pricey to a borrower. Different from a piggyback loan where the lender absorbs all the deficits, PMI is profitable for the lender because they collect the money, and they get paid if the borrower is unable to pay.

Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.

How can a homeowner refrain from bearing the expense 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 original loan amount. Savvy home owners can get off the hook ahead of time. The law promises that, at the request of the home owner, the PMI must be dropped when the principal amount reaches just 80 percent.

It can take countless years to arrive at the point where the principal is just 20% of the original loan amount, so it's necessary to know how your home has grown in value. After all, any appreciation you've achieved over time counts towards abolishing PMI. So why pay it after the balance of your loan has dropped below the 80% threshold? Even when nationwide trends hint at declining home values, realize that real estate is local. Your neighborhood may not be reflecting the national trends and/or your home could have acquired equity before things settled down.

A certified, licensed real estate appraiser can help home owners understand just when their home's equity goes over the 20% point, as it's a difficult thing to know. As appraisers, it's our job to understand the market dynamics of our area. At Tri-County Appraisals, we know when property values have risen or declined. We're masters at determining value trends in Loveland, Larimer County and surrounding areas. When faced with information from an appraiser, the mortgage company will usually do away with the PMI with little trouble. At that time, the homeowner can retain the savings from that point on.

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