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DANIEL I KANDEL can help you remove your Private Mortgage Insurance

A 20% down payment is usually the standard when buying a house. Because the liability for the lender is often only the difference between the home value and the sum remaining on the loan, the 20% provides a nice buffer against the charges of foreclosure, selling the home again, and typical value changesin the event a purchaser is unable to pay.

During the recent mortgage boom of the mid 2000s, it became widespread to see lenders taking down payments of 10, 5 or often 0 percent. How does a lender endure the added risk of the low down payment? The answer is Private Mortgage Insurance or PMI. This additional policy takes care of the lender in case a borrower defaults on the loan and the worth of the house is lower than the loan balance.

Since the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and oftentimes isn't even tax deductible, PMI is pricey to a borrower. Unlike a piggyback loan where the lender takes in all the costs, PMI is money-making for the lender because they secure 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 home buyers can avoid paying PMI

The Homeowners Protection Act of 1998 forces the lenders on most loans to automatically terminate the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount. Keen home owners can get off the hook beforehand. The law designates that, at the request of the home owner, the PMI must be abandoned when the principal amount equals only 80 percent.

It can take countless years to arrive at the point where the principal is just 20% of the original amount borrowed, so it's necessary to know how your home has appreciated in value. After all, all of the appreciation you've achieved over the years counts towards abolishing PMI. So what's the reason for paying it after the balance of your loan has fallen below the 80% threshold? Your neighborhood may not be adopting the national trends and/or your home might have secured equity before things cooled off, so even when nationwide trends indicate plummeting home values, you should understand that real estate is local.

An accredited, 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. As appraisers, it's our job to recognize the market dynamics of our area. At DANIEL I KANDEL, we know when property values have risen or declined. We're experts at identifying value trends in Weston/Ft. Lauderdale, Broward County and surrounding areas. When faced with information from an appraiser, the mortgage company will most often cancel the PMI with little anxiety. At which time, the home owner can relish 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