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

A 20% down payment is usually accepted when getting a mortgage. The lender's liability is generally only the remainder between the home value and the amount outstanding on the loan, so the 20% provides a nice buffer against the charges of foreclosure, reselling the home, and typical value changes on the chance that a purchaser defaults.

The market was working with down payments as low as 10, 5 and often 0 percent during the mortgage boom of the mid 2000s. How does a lender handle the increased risk of the small down payment? The answer is Private Mortgage Insurance or PMI. This added policy takes care of the lender if a borrower doesn't pay on the loan and the worth of the house is lower than what is owed on the loan.

Because the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and frequently isn't even tax deductible, PMI can be pricey to a borrower. Separate from a piggyback loan where the lender absorbs all the damages, PMI is beneficial for the lender because they collect the money, and they get the money 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 a homeowner prevent bearing the cost of PMI?

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

It can take many years to get to the point where the principal is only 20% of the original amount of the loan, so it's crucial to know how your home has appreciated in value. After all, every bit of appreciation you've accomplished over time counts towards dismissing PMI. So why should you pay it after the balance of your loan has dropped below the 80% threshold? Your neighborhood may not be minding the national trends and/or your home may have acquired equity before things cooled off, so even when nationwide trends predict falling home values, you should realize that real estate is local.

The hardest thing for most home owners to understand is just when their home's equity goes over 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 Jones Realty, we know when property values have risen or declined. We're experts at determining value trends in Tulsa, Tulsa County and surrounding areas. Faced with figures from an appraiser, the mortgage company will usually do away with the PMI with little anxiety. At that time, the home owner 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