Have equity in your home? Want a lower payment? An appraisal from Deer Creek Appraisals can help you get rid of your PMI.A 20% down payment is usually accepted when getting a mortgage. Since the risk for the lender is oftentimes only the remainder between the home value and the amount outstanding on the loan, the 20% adds a nice cushion against the costs of foreclosure, reselling the home, and regular value fluctuationsin the event a borrower defaults. 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 endure the additional risk of the low down payment? The answer is Private Mortgage Insurance or PMI. PMI covers the lender in the event a borrower doesn't pay on the loan and the market price of the property is less than the loan balance. PMI is costly to a borrower because the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and many times isn't even tax deductible. It's profitable for the lender because they obtain the money, and they get the money if the borrower is unable to pay, different from a piggyback loan where the lender consumes all the damages. 
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How can a buyer avoid bearing the cost of PMI?The Homeowners Protection Act of 1998 makes the lenders on nearly all loans to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the original loan amount. The law pledges that, upon request of the homeowner, the PMI must be dropped when the principal amount equals just 80 percent. So, savvy home owners can get off the hook sooner than expected. Considering it can take many years to arrive at the point where the principal is just 20% of the original amount of the loan, it's crucial to know how your home has grown in value. After all, any appreciation you've accomplished over time counts towards dismissing PMI. So what's the reason for paying it after the balance of your loan has dropped below the 80% threshold? Your neighborhood might not be following the national trends and/or your home might have gained equity before things settled down, so even when nationwide trends predict declining 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 hard thing to know. It is an appraiser's job to know the market dynamics of their area. At Deer Creek Appraisals, we know when property values have risen or declined. We're masters at determining value trends in Denver, Jefferson County and surrounding areas. Faced with data from an appraiser, the mortgage company will generally remove the PMI with little trouble. At which time, the home owner can enjoy the savings from that point on.
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