Let Ken Colley & Associates Inc. help you learn if you can eliminate your PMIIt's generally known that a 20% down payment is common when purchasing a home. The lender's liability is oftentimes only the difference between the home value and the sum due on the loan, so the 20% adds a nice buffer against the costs of foreclosure, selling the home again, and typical value variations in the event a borrower is unable to pay. During the recent mortgage upturn of the last decade, it became common to see lenders commanding down payments of 10, 5 or sometimes 0 percent. A lender is able to handle the additional risk of the small down payment with Private Mortgage Insurance or PMI. This supplementary plan takes care of the lender in case a borrower is unable to pay on the loan and the value of the house is lower than the loan balance. Since the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and oftentimes isn't even tax deductible, PMI is pricey to a borrower. Different from a piggyback loan where the lender consumes all the deficits, PMI is profitable for the lender because they obtain the money, and they receive payment 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 expense of PMI?The Homeowners Protection Act of 1998 obligates the lenders on nearly all loans to automatically stop the PMI when the principal balance of the loan reaches 78 percent of the original loan amount. The law states that, at the request of the homeowner, the PMI must be released when the principal amount reaches only 80 percent. So, savvy home owners can get off the hook a little early. It can take countless years to reach the point where the principal is only 20% of the original amount borrowed, so it's important to know how your home has grown in value. After all, every bit of appreciation you've gained over the years counts towards dismissing PMI. So why pay it after the balance of your loan has fallen below the 80% threshold? Your neighborhood might not be adhering to the national trends and/or your home could have gained equity before things simmered down, so even when nationwide trends predict falling home values, you should understand that real estate is local. A certified, licensed real estate appraiser can help homeowners understand just when their home's equity goes over the 20% point, as it's a tough thing to know. It's an appraiser's job to keep up with the market dynamics of their area. At Ken Colley & Associates Inc., we're experts at identifying value trends in Fort Smith, Sebastian County and surrounding areas, and we know when property values have risen or declined. When faced with data from an appraiser, the mortgage company will most often remove the PMI with little anxiety. At that time, the homeowner can relish the savings from that point on.
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