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Herzog Appraisal can help you remove your Private Mortgage Insurance

A 20% down payment is usually the standard when getting a mortgage. Because the liability for the lender is generally only the remainder between the home value and the sum outstanding on the loan, the 20% supplies a nice cushion against the charges of foreclosure, reselling the home, and natural value fluctuations in the event a purchaser doesn't pay.

During the recent mortgage boom of the last decade, it became customary to see lenders making deals with down payments of 10, 5 or even 0 percent. A lender is able to handle the added risk of the minimal down payment with Private Mortgage Insurance or PMI. PMI covers the lender in the event a borrower is unable to pay on the loan and the market price of the home is less than the balance of the loan.

Because the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and oftentimes isn't even tax deductible, PMI can be pricey to a borrower. Separate from a piggyback loan where the lender absorbs all the costs, PMI is profitable for the lender because they secure the money, and they are covered if the borrower doesn't pay.

Has your home value appreciated since you first purchased? Contact Herzog Appraisal today at 989 728-2220 to see if you can cancel your Private Mortgage Insurance payment.

How can buyers keep from paying PMI?

With the passage of The Homeowners Protection Act of 1998, lenders are obligated to automatically cease the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount on most loans. The law pledges that, upon request of the homeowner, the PMI must be abandoned when the principal amount equals just 80 percent. So, smart home owners can get off the hook ahead of time.

It can take several years to reach the point where the principal is just 80% of the original amount of the loan, so it's important to know how your Michigan home has increased in value. After all, any appreciation you've gained over the years counts towards removing PMI. So why pay it after the balance of your loan has dropped below the 80% threshold? Even when nationwide trends signify decreasing home values, be aware that real estate is local. Your neighborhood might not be minding the national trends and/or your home might have acquired equity before things declined.

An accredited, Michigan licensed real estate appraiser can help homeowners figure out if their equity has reached the 20% point, as it's a tough thing to know. It's an appraiser's job to know the market dynamics of their area. At Herzog Appraisal, we're masters at pinpointing value trends in Hale, Iosco County, and surrounding areas, and we know when property values have risen or declined. When faced with information from an appraiser, the mortgage company will generally drop the PMI with little trouble. At which time, the homeowner can enjoy the savings from that point on.

Does your monthly house payment include a fee for PMI? Call Herzog Appraisal today at 989 728-2220 or send us an e-mail. A current appraisal could save you thousands.

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