Have equity in your home? Want a lower payment? An appraisal from Jax Appraisal, LLC. can help you get rid of your PMI.

When buying a house, a 20% down payment is usually the standard. Since the risk for the lender is often only the remainder between the home value and the amount due on the loan, the 20% provides a nice cushion against the charges of foreclosure, reselling the home, and typical value changesin the event a purchaser doesn't pay.

During the recent mortgage boom of the last decade, it became customary to see lenders commanding down payments of 10, 5 or often 0 percent. How does a lender manage the added risk of the low down payment? The solution is Private Mortgage Insurance or PMI. This supplemental policy takes care of the lender in the event a borrower defaults on the loan and the market price 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 monthly payment and often isn't even tax deductible. Separate from a piggyback loan where the lender absorbs all the costs, PMI is money-making for the lender because they collect the money, and they receive payment if the borrower is unable to pay.

How homeowners can prevent bearing the expense of PMI

With the employment of The Homeowners Protection Act of 1998, on most loans lenders are required to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the primary loan amount. The law promises that, upon request of the homeowner, the PMI must be dropped when the principal amount equals just 80 percent. So, smart homeowners can get off the hook a little earlier.

It can take many years to get to the point where the principal is only 20% of the original amount of the loan, so it's essential to know how your home has increased in value. After all, any appreciation you've accomplished over time counts towards dismissing PMI. So why pay it after your loan balance has dropped below the 80% threshold? Despite the fact that nationwide trends indicate declining home values, be aware that real estate is local. Your neighborhood may not be adopting the national trends and/or your home could have acquired equity before things simmered down.

The hardest thing for almost all homeowners to know is just when their home's equity goes over the 20% point. A certified, licensed real estate appraiser can surely help. It's an appraiser's job to know the market dynamics of their area. At Jax Appraisal, LLC. , we're masters at analyzing value trends in Jacksonville, Duval County and surrounding areas, and we know when property values have risen or declined. Faced with data from an appraiser, the mortgage company will generally remove the PMI with little effort. At which time, the homeowner can delight in the savings from that point on.

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