Let Collier Residential Appraisal, Inc. help you figure out if you can cancel your PMI

When getting a mortgage, a 20% down payment is typically the standard. Considering the liability for the lender is oftentimes only the remainder between the home value and the amount remaining on the loan, the 20% supplies a nice buffer against the expenses of foreclosure, reselling the home, and regular value changes in the event a borrower defaults.

During the recent mortgage upturn of the last decade, it was customary to see lenders reducing down payments to 10, 5 or sometimes 0 percent. A lender is able to handle the added risk of the reduced down payment with Private Mortgage Insurance or PMI. PMI takes care of the lender in the event a borrower defaults on the loan and the value of the home is lower than what is owed on the loan.

PMI is costly to a borrower because the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and on many occasions isn't even tax deductible. It's advantageous for the lender because they collect the money, and they are covered if the borrower defaults, in contrast to a piggyback loan where the lender consumes all the losses.


	Has your home value appreciated since you first purchased? Contact Collier Residential Appraisal, Inc. today at (239) 649-1446 to see if you can get rid of your Private Mortgage Insurance premium.

How buyers can refrain from bearing the cost of PMI

The Homeowners Protection Act of 1998 makes the lenders on most loans to automatically terminate the PMI when the principal balance of the loan equals 78 percent of the original loan amount. Smart homeowners can get off the hook beforehand. The law guarantees that, at the request of the home owner, the PMI must be released when the principal amount reaches only 80 percent.

Considering it can take several years to arrive at the point where the principal is only 80% of the original amount borrowed, it's essential to know how your Florida home has increased in value. After all, every bit of appreciation you've achieved over the years counts towards dismissing PMI. So why should you pay it after your loan balance has dropped below the 80% threshold? Even when nationwide trends hint at decreasing home values, realize that real estate is local. Your neighborhood may not be minding the national trends and/or your home could have gained equity before things simmered down.

The hardest thing for most homeowners to figure out is just when their home's equity rises above the 20% point. An accredited, Florida licensed real estate appraiser can certainly help. As appraisers, it's our job to recognize the market dynamics of our area. At Collier Residential Appraisal, Inc., we're experts at identifying value trends in Naples, Collier County, and surrounding areas, and we know when property values have risen or declined. When faced with figures from an appraiser, the mortgage company will most often cancel the PMI with little trouble. At which time, the homeowner can delight in the savings from that point on.


	Did you have less than 20% to put down on your mortgage? Contact Collier Residential Appraisal, Inc. today at (239) 649-1446. You may be able to cancel your Private Mortgage Insurance premium.

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