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Let DANIEL I KANDEL help you discover if you can cancel your PMI

A 20% down payment is usually the standard when getting a mortgage. The lender's liability is usually only the remainder between the home value and the amount remaining on the loan, so the 20% adds a nice cushion against the costs of foreclosure, selling the home again, and typical value variations in the event a borrower doesn't pay.

Banks were taking down payments as low as 10, 5 and often 0 percent during the mortgage boom of the mid 2000s. How does a lender manage the additional risk of the low down payment? The answer is Private Mortgage Insurance or PMI. PMI protects the lender in the event a borrower is unable to pay on the loan and the market price of the property is lower than the balance of the loan.

PMI is pricey to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and many times isn't even tax deductible. Opposite from a piggyback loan where the lender takes in all the losses, PMI is lucrative for the lender because they acquire 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 buyer prevent bearing the expense of PMI?

With the implementation of The Homeowners Protection Act of 1998, on most loans lenders are forced to automatically stop the PMI when the principal balance of the loan equals 78 percent of the initial loan amount. Wise home owners can get off the hook ahead of time. The law states that, upon request of the home owner, the PMI must be dropped when the principal amount reaches only 80 percent.

Considering it can take countless years to get to the point where the principal is just 20% of the initial amount of the loan, it's necessary to know how your home has appreciated in value. After all, any appreciation you've accomplished over the years counts towards removing PMI. So why should you pay it after your loan balance has fallen below the 80% mark? Despite the fact that nationwide trends indicate plunging home values, understand that real estate is local. Your neighborhood may 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 goes over the 20% point, as it's a tough thing to know. As appraisers, it's our job to know the market dynamics of our area. At DANIEL I KANDEL, we're masters at pinpointing value trends in Weston/Ft. Lauderdale, Broward County and surrounding areas, and we know when property values have risen or declined. Faced with data from an appraiser, the mortgage company will most often drop the PMI with little effort. At that time, the homeowner 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