Rabin Appraisal Associates 847-337-5787 can help you remove your Private Mortgage InsuranceA 20% down payment is typically accepted when buying a house. The lender's risk is usually only the remainder between the home value and the sum remaining on the loan, so the 20% provides a nice cushion against the charges of foreclosure, selling the home again, and typical value variations in the event a purchaser doesn't pay. During the recent mortgage boom of the mid 2000s, it was common to see lenders commanding down payments of 10, 5 or sometimes 0 percent. How does a lender manage the added risk of the low down payment? The answer is Private Mortgage Insurance or PMI. This additional policy protects the lender in the event a borrower defaults on the loan and the market price of the home is less than what is owed on the loan. PMI can be expensive to a borrower in that the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and many times isn't even tax deductible. It's profitable for the lender because they acquire the money, and they get paid if the borrower is unable to pay, unlike a piggyback loan where the lender absorbs 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 home buyer avoid bearing the expense of PMI?The Homeowners Protection Act of 1998 requires the lenders on most loans to automatically cease the PMI when the principal balance of the loan equals 78 percent of the initial loan amount. Smart homeowners can get off the hook ahead of time. The law promises that, upon request of the home owner, the PMI must be released when the principal amount equals just 80 percent. Considering it can take many years to reach the point where the principal is just 20% of the initial amount borrowed, it's essential to know how your home has grown in value. After all, every bit of appreciation you've gained over time counts towards removing PMI. So why pay it after your loan balance has dropped below the 80% threshold? Your neighborhood may not be following the national trends and/or your home could have acquired equity before things settled down, so even when nationwide trends indicate declining home values, you should realize that real estate is local. The hardest thing for most homeowners to understand is just when their home's equity goes over the 20% point. A certified, licensed real estate appraiser can certainly help. It's an appraiser's job to recognize the market dynamics of their area. At Rabin Appraisal Associates 847-337-5787, we know when property values have risen or declined. We're experts at determining value trends in Gurnee, Lake County and surrounding areas. When faced with information from an appraiser, the mortgage company will most often do away with the PMI with little effort. At that time, the homeowner can retain the savings from that point on.
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