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DANIEL I KANDEL can help you remove your Private Mortgage Insurance

When purchasing a home, a 20% down payment is usually the standard. The lender's risk is oftentimes only the remainder between the home value and the amount due 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 is unable to pay.

The market was taking down payments as low as 10, 5 and even 0 percent in the peak of last decade's mortgage boom. How does a lender manage the additional risk of the small down payment? The solution is Private Mortgage Insurance or PMI. This supplemental policy takes care of the lender in case a borrower defaults on the loan and the worth of the property is less than the loan balance.

PMI is costly to a borrower in that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage monthly payment and generally isn't even tax deductible. Separate from a piggyback loan where the lender absorbs all the damages, PMI is advantageous 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 homebuyers prevent paying PMI?

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

Since it can take countless years to reach the point where the principal is only 20% of the initial amount of the loan, it's necessary to know how your home has grown in value. After all, any appreciation you've obtained over the years counts towards removing PMI. So what's the reason for paying it after your loan balance has dropped below the 80% threshold? Your neighborhood might not be following the national trends and/or your home might have secured equity before things simmered down, so even when nationwide trends hint at plunging 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 rises above the 20% point, as it's a hard thing to know. As appraisers, it's our job to understand the market dynamics of our area. At DANIEL I KANDEL, we're masters at determining value trends in Weston/Ft. Lauderdale, Broward County and surrounding areas, and we know when property values have risen or declined. Faced with figures from an appraiser, the mortgage company will generally drop 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