Let Walker & Associates help you decide if you can eliminate your PMI

It's largely inferred that a 20% down payment is the standard when purchasing a home. Because the liability for the lender is usually only the remainder between the home value and the sum remaining on the loan, the 20% supplies a nice cushion against the charges of foreclosure, selling the home again, and natural value variations on the chance that a purchaser defaults.

During the recent mortgage boom of the mid 2000s, it became common to see lenders only asking for down payments of 10, 5, 3 or sometimes 0 percent. How does a lender endure the increased risk of the small down payment? The answer is Private Mortgage Insurance or PMI. This added policy takes care of the lender in the event a borrower defaults on the loan and the market price of the house is less than the loan balance.

PMI can be pricey to a borrower in that the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and frequently isn't even tax deductible. It's profitable for the lender because they obtain the money, and they receive payment if the borrower is unable to pay, unlike a piggyback loan where the lender consumes all the damages.


	Has your real estate appreciated since you first purchased? Contact Walker & Associates today at (704) 366-0661. You may be able to save money by removing your Private Mortgage Insurance premium.

How can a homeowner avoid paying PMI?

The Homeowners Protection Act of 1998 obligates the lenders on the majority of loans to automatically terminate the PMI when the principal balance of the loan equals 78 percent of the original loan amount. Acute home owners can get off the hook ahead of time. The law guarantees that, upon request of the home owner, the PMI must be released when the principal amount equals only 80 percent.

It can take a significant number of years to reach the point where the principal is only 80% of the original amount of the loan, so it's important to know how your North Carolina home has appreciated in value. After all, every bit of appreciation you've acquired over time counts towards abolishing PMI. So what's the reason for paying it after your loan balance has dropped below the 80% mark? Even when nationwide trends predict declining home values, be aware that real estate is local. Your neighborhood might not be following the national trends and/or your home may have secured equity before things simmered down.

The toughest thing for almost all consumers to figure out is just when their home's equity goes over the 20% point. An accredited, North Carolina licensed real estate appraiser can certainly help. It is an appraiser's job to understand the market dynamics of their area. At Walker & Associates, we know when property values have risen or declined. We're masters at recognizing value trends in Charlotte, Mecklenburg County, and surrounding areas. Faced with information from an appraiser, the mortgage company will most often remove the PMI with little effort. At that time, the home owner can relish the savings from that point on.


	Does your monthly loan payment include a fee for PMI? Call Walker & Associates today at (704) 366-0661 or send us an e-mail. A current 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