Have equity in your home? Want a lower payment? An appraisal from Ken Colley & Associates Inc. can help you get rid of your PMI.When purchasing a home, a 20% down payment is usually the standard. Considering the liability for the lender is usually only the difference between the home value and the sum outstanding on the loan, the 20% supplies a nice buffer against the expenses of foreclosure, selling the home again, and natural value changeson the chance that 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. A lender is able to endure the additional risk of the small down payment with Private Mortgage Insurance or PMI. This supplemental policy protects the lender in the event a borrower is unable to pay on the loan and the value of the property is lower than the balance of the loan. PMI is pricey to a borrower because the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and often isn't even tax deductible. It's beneficial for the lender because they secure the money, and they get paid if the borrower defaults, unlike a piggyback loan where the lender absorbs all the costs. 
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How can homebuyers prevent bearing the cost of PMI?The Homeowners Protection Act of 1998 makes the lenders on nearly all loans to automatically eliminate the PMI when the principal balance of the loan reaches 78 percent of the original loan amount. Keen homeowners can get off the hook beforehand. The law stipulates that, at the request of the home owner, the PMI must be dropped when the principal amount equals just 80 percent. It can take many years to reach the point where the principal is only 20% of the initial loan amount, so it's necessary to know how your home has grown in value. After all, all of the appreciation you've obtained over time counts towards dismissing PMI. So why pay it after your loan balance has fallen below the 80% threshold? Despite the fact that nationwide trends indicate decreasing home values, be aware that real estate is local. Your neighborhood may not be heeding the national trends and/or your home could have acquired equity before things cooled off. The toughest thing for many 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. It is an appraiser's job to keep up with the market dynamics of their area. At Ken Colley & Associates Inc., we know when property values have risen or declined. We're masters at determining value trends in Fort Smith, Sebastian County and surrounding areas. When faced with information from an appraiser, the mortgage company will usually cancel the PMI with little effort. At which time, the home owner can retain the savings from that point on.
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