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

A 20% down payment is usually the standard when purchasing a home. Since the liability for the lender is oftentimes only the remainder between the home value and the sum outstanding on the loan, the 20% supplies a nice buffer against the expenses of foreclosure, selling the home again, and typical value changesin the event a borrower is unable to pay.

During the recent mortgage upturn of the mid 2000s, it became common to see lenders taking down payments of 10, 5 or often 0 percent. How does a lender endure the added risk of the low down payment? The answer is Private Mortgage Insurance or PMI. PMI covers the lender in the event a borrower doesn't pay on the loan and the value of the house is lower than what is owed on the loan.

PMI is pricey to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and oftentimes isn't even tax deductible. Contradictory to a piggyback loan where the lender takes in all the damages, PMI is profitable for the lender because they acquire 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 buyers keep from bearing the expense of PMI?

The Homeowners Protection Act of 1998 forces the lenders on nearly all loans to automatically terminate the PMI when the principal balance of the loan reaches 78 percent of the original loan amount. Acute homeowners can get off the hook beforehand. The law designates that, upon request of the home owner, the PMI must be dropped when the principal amount reaches just 80 percent.

Because it can take countless years to arrive at the point where the principal is only 20% of the original amount borrowed, it's necessary to know how your home has appreciated in value. After all, any appreciation you've achieved over the years counts towards abolishing PMI. So why pay it after the balance of your loan has fallen below the 80% mark? Even when nationwide trends hint at plunging home values, realize that real estate is local. Your neighborhood might not be minding the national trends and/or your home might have secured equity before things simmered down.

An accredited, licensed real estate appraiser can help home owners understand just when their home's equity rises above the 20% point, as it's a tough thing to know. It's an appraiser's job to understand the market dynamics of their area. At Tierney Appraisals, we know when property values have risen or declined. We're experts at identifying value trends in Beverly, Essex County and surrounding areas. Faced with data from an appraiser, the mortgage company will generally remove the PMI with little trouble. At that time, the home owner 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