Let Collier Residential Appraisal, Inc. help you decide if you can get rid of your PMI

A 20% down payment is typically accepted when purchasing a home. Since the liability for the lender is usually only the remainder between the home value and the amount outstanding on the loan, the 20% provides a nice cushion against the expenses of foreclosure, reselling the home, and typical value fluctuations in the event a borrower defaults.

Banks were working with down payments dropping to 10, 5 and often 0 percent during the mortgage boom of the last decade. How does a lender handle the increased risk of the low down payment? The solution is Private Mortgage Insurance or PMI. PMI guards the lender in case a borrower is unable to pay on the loan and the market price of the property is less than the balance of the loan.

PMI is pricey to a borrower because the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and often isn't even tax deductible. Unlike a piggyback loan where the lender absorbs all the costs, PMI is lucrative for the lender because they collect the money, and they are covered if the borrower doesn't pay.


	Is PMI included in your monthly mortgage payment? Call Collier Residential Appraisal, Inc. today at (239) 649-1446 or send us an e-mail. A recent appraisal could save you thousands.

How can homeowners refrain from bearing the expense of PMI?

With the passage of The Homeowners Protection Act of 1998, lenders are obligated to automatically cancel the PMI when the principal balance of the loan reaches 78 percent of the original loan amount on most loans. The law guarantees that, at the request of the home owner, the PMI must be abandoned when the principal amount equals only 80 percent. So, wise homeowners can get off the hook a little earlier.

Because it can take many years to reach the point where the principal is only 80% of the initial amount borrowed, it's important to know how your Florida home has grown in value. After all, any appreciation you've acquired over the years counts towards removing PMI. So why pay it after your loan balance has fallen below the 80% threshold? Even when nationwide trends indicate lower overall home values, be aware that real estate is local. Your neighborhood may not be adhering to the national trends and/or your home may have secured equity before things declined.

The toughest thing for almost all homeowners to determine is just when their home's equity rises above the 20% point. An accredited, Florida licensed real estate appraiser can definitely help. Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job! At Collier Residential Appraisal, Inc., we know when property values have risen or declined. We're experts at identifying value trends in Naples, Collier County, and surrounding areas. Faced with data from an appraiser, the mortgage company will most often do away with the PMI with little anxiety. At that time, the home owner can retain the savings from that point on.


	The savings from getting rid of your PMI pays for the appraisal in no time. Collier Residential Appraisal, Inc. has years of experience with real estate value trends in Naples and Collier 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