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

A 20% down payment is typically accepted when getting a mortgage. Considering the risk for the lender is usually only the difference between the home value and the sum due on the loan, the 20% provides a nice cushion against the charges of foreclosure, reselling the home, and regular value variationsin the event a borrower defaults.

The market was working with down payments as low as 10, 5 and even 0 percent during the mortgage boom of the mid 2000s. A lender is able to endure the increased risk of the minimal down payment with Private Mortgage Insurance or PMI. This supplemental plan takes care of the lender in case a borrower defaults on the loan and the market price of the house is less than what is owed on the loan.

PMI is costly to a borrower in that the $40-$50 a month per $100,000 borrowed is rolled into the mortgage payment and oftentimes isn't even tax deductible. It's lucrative for the lender because they obtain the money, and they get paid if the borrower defaults, opposite from a piggyback loan where the lender consumes all the losses.

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

How can a buyer avoid bearing the cost of PMI?

The Homeowners Protection Act of 1998 forces the lenders on most loans to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the initial loan amount. The law states that, at the request of the home owner, the PMI must be released when the principal amount reaches only 80 percent. So, wise home owners can get off the hook a little early.

Because it can take many years to reach the point where the principal is just 20% of the initial amount of the loan, it's necessary to know how your home has grown in value. After all, every bit of appreciation you've obtained over time counts towards abolishing PMI. So why should you pay it after your loan balance has fallen below the 80% threshold? Your neighborhood might not be adopting the national trends and/or your home might have secured equity before things cooled off, so even when nationwide trends indicate plunging home values, you should realize that real estate is local.

The hardest thing for most homeowners to know is just when their home's equity rises above the 20% point. An accredited, licensed real estate appraiser can certainly help. As appraisers, it's our job to understand the market dynamics of our area. At PCI Appraisal Company, we're masters at pinpointing value trends in Virginia Beach, Virginia Beach City County and surrounding areas, and we know when property values have risen or declined. When faced with information from an appraiser, the mortgage company will usually eliminate the PMI with little anxiety. At that time, the home owner can enjoy 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