Have equity in your home? Want a lower payment? An appraisal from Tight & Right Real Estate Valuation can help you get rid of your PMI.

A 20% down payment is usually accepted when purchasing a home. The lender's liability is often only the remainder between the home value and the sum due on the loan, so the 20% supplies a nice cushion against the charges of foreclosure, selling the home again, and typical value fluctuations on the chance that a borrower doesn't pay.

During the recent mortgage boom of the last decade, it was customary to see lenders requiring down payments of 10, 5 or often 0 percent. A lender is able to manage the added risk of the reduced down payment with Private Mortgage Insurance or PMI. PMI covers the lender in the event a borrower is unable to pay on the loan and the market price of the home is less than the balance of the loan.

Because the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and often isn't even tax deductible, PMI can be pricey to a borrower. It's favorable for the lender because they obtain the money, and they get the money if the borrower defaults, opposite from a piggyback loan where the lender takes in all the deficits.

Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.

How can a home buyer refrain from bearing the cost of PMI?

With the utilization of The Homeowners Protection Act of 1998, on most loans lenders are required to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the initial loan amount. Acute home owners can get off the hook a little early. The law stipulates that, at the request of the homeowner, the PMI must be released when the principal amount reaches just 80 percent.

Since it can take many years to reach the point where the principal is only 20% of the original amount of the loan, it's crucial to know how your home has appreciated in value. After all, all of the appreciation you've acquired over time counts towards dismissing PMI. So why pay it after the balance of your loan has dropped below the 80% mark? Your neighborhood might not be adhering to the national trends and/or your home could have gained equity before things settled down, so even when nationwide trends signify declining home values, you should realize that real estate is local.

The hardest thing for many home owners to understand is just when their home's equity rises above the 20% point. A certified, licensed real estate appraiser can certainly help. As appraisers, it's our job to recognize the market dynamics of our area. At Tight & Right Real Estate Valuation, we know when property values have risen or declined. We're masters at determining value trends in Princeton, Union County and surrounding areas. Faced with figures from an appraiser, the mortgage company will usually cancel the PMI with little effort. At which time, the homeowner can delight in 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