Area Appraisal Services, Inc. can help you remove your Private Mortgage Insurance

When getting a mortgage, a 20% down payment is usually the standard. The lender's only risk is generally just the remainder between the home value and the sum outstanding on the loan, so the 20% adds a nice cushion against the charges of foreclosure, selling the home again, and natural value variations in the event a borrower is unable to pay.

During the recent mortgage boom of the last decade, it became widespread to see lenders only asking for down payments of 10, 5 or even 0 percent. A lender is able to manage the additional risk of the reduced down payment with Private Mortgage Insurance or PMI. PMI covers the lender in the event a borrower doesn't pay on the loan and the value of the property is lower than what the borrower still owes on the loan.

Since the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and often isn't even tax deductible, PMI is costly to a borrower. As opposed to a piggyback loan where the lender takes in all the costs, PMI is beneficial for the lender because they obtain the money, and they get the money if the borrower defaults.


	Does your monthly mortgage payment have a lineitem for PMI? Call Area Appraisal Services, Inc. today at 301-215-7567 or send us an e-mail. Documentation of your home's present value could save you thousands.

How can homebuyers prevent bearing the expense of PMI?

With the passage of The Homeowners Protection Act of 1998, lenders are required to automatically cease the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount on nearly all loans. Keen homeowners can get off the hook sooner than expected. The law stipulates that, at the request of the home owner, the PMI must be dropped when the principal amount reaches only 80 percent.

Since it can take a significant number of years to reach the point where the principal is only 80% of the original amount of the loan, it's necessary to know how your Maryland home has appreciated in value. After all, all of the appreciation you've accomplished over the years counts towards removing PMI. So why should you pay it after the balance of your loan has fallen below the 80% mark? Your neighborhood might not adhere to national trends and/or your home could have gained equity before things declined. So even when nationwide trends signify declining home values, you should know most importantly that real estate is local.

The toughest thing for almost all people to figure out is whether their home equity has exceeded the 20% point. An accredited, Maryland licensed real estate appraiser can surely help. Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job! At Area Appraisal Services, Inc., we're masters at determining value trends in Bethesda, Montgomery 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 cancel the PMI with little trouble. At that time, the homeowner can enjoy the savings from that point on.


	Did you secure your mortgage with less than 20% down? Contact Area Appraisal Services, Inc. today at 301-215-7567 to see if you can cancel your Private Mortgage Insurance payment.

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