Let Principal Appraisal Corp. help you decide if you can get rid of your PMI

It's widely understood that a 20% down payment is common when purchasing a home. The lender's risk is usually only the remainder between the home value and the sum outstanding on the loan, so the 20% supplies a nice cushion against the charges of foreclosure, selling the home again, and regular value fluctuations on the chance that a borrower defaults.

During the recent mortgage boom of the last decade, it became widespread to see lenders reducing down payments to 10, 5, 3 or sometimes 0 percent. A lender is able to endure the increased risk of the reduced down payment with Private Mortgage Insurance or PMI. PMI covers the lender in the event a borrower defaults on the loan and the worth of the property is less than what the borrower still owes on the loan.

Since the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and on many occasions isn't even tax deductible, PMI is pricey to a borrower. Unlike a piggyback loan where the lender takes in all the deficits, PMI is money-making for the lender because they acquire the money, and they get paid if the borrower defaults.


	Is PMI included in your monthly house payment? Call Principal Appraisal Corp. today at 206-632-2333 or send us an e-mail. Documentation of your home's current value could save you thousands.

How can a home owner avoid bearing the cost of PMI?

The Homeowners Protection Act of 1998 makes the lenders on nearly all loans to automatically stop the PMI when the principal balance of the loan reaches 78 percent of the primary loan amount. Keen home owners can get off the hook a little early. The law pledges that, at the request of the home owner, the PMI must be released when the principal amount equals just 80 percent.

Because it can take many years to reach the point where the principal is just 80% of the original amount borrowed, it's crucial to know how your Washington home has grown in value. After all, all of the appreciation you've accomplished over the years counts towards removing PMI. So why should you pay it after the balance of your loan has dropped below the 80% mark? Your neighborhood may not follow national trends and/or your home might have gained equity before things declined. So even when nationwide trends indicate a reduction in home values, you should realize that real estate is local.

A certified, Washington licensed real estate appraiser can help homeowners figure out if their equity has made it to the 20% point, as it's a difficult thing to know. It is an appraiser's job to recognize the market dynamics of their area. At Principal Appraisal Corp., we know when property values have risen or declined. We're experts at pinpointing value trends in Seattle, King County, and surrounding areas. When faced with figures from an appraiser, the mortgage company will often remove the PMI with little anxiety. At that time, the home owner can retain the savings from that point on.


	Is PMI something increasing your monthly mortgage payment? Call Principal Appraisal Corp. today at 206-632-2333 or send us an e-mail. A new appraisal could save you thousands.

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