Let Kraemer Appraisals help you learn if you can get rid of your PMI

It's widely understood that a 20% down payment is accepted when buying a house. Considering the liability for the lender is usually only the remainder between the home value and the sum remaining on the loan, the 20% provides a nice cushion against the charges of foreclosure, reselling the home, and regular value variations on the chance that a purchaser doesn't pay.

During the recent mortgage upturn that our country recently experienced, it was widespread to see lenders making deals with down payments of 10, 5, 3 or sometimes 0 percent. A lender is able to manage the increased risk of the low down payment with Private Mortgage Insurance or PMI. PMI takes care of the lender in the event a borrower is unable to pay on the loan and the market price of the property is lower than the loan balance.

PMI can be pricey to a borrower in that the $40-$60 a month per $100,000 borrowed is rolled into the mortgage monthly payment and oftentimes isn't even tax deductible. Separate from a piggyback loan where the lender absorbs all the losses, PMI is favorable for the lender because they collect the money, and they receive payment if the borrower doesn't pay.


	Has your real estate appreciated since you first purchased? Contact Kraemer Appraisals today at (414) 421-8208. You may be able to save money by removing your Private Mortgage Insurance premium.

How can home buyers prevent bearing the expense of PMI?

The Homeowners Protection Act of 1998 forces the lenders on the majority of loans to automatically stop the PMI when the principal balance of the loan reaches 78 percent of the original loan amount. The law guarantees that, at the request of the home owner, the PMI must be abandoned when the principal amount equals just 80 percent. So, savvy homeowners can get off the hook ahead of time.

It can take several years to arrive at the point where the principal is only 80% of the original loan amount, so it's important to know how your Wisconsin home has grown in value. After all, all of the appreciation you've gained over the years counts towards dismissing PMI. So why should you pay it after the balance of your loan has dropped below the 80% mark? Your neighborhood might not adhere to national trends and/or your home could have acquired equity before things declined. So even when nationwide trends hint at a reduction in home values, you should understand that real estate is local.

The hardest thing for many consumers to figure out is just when their home's equity rises above the 20% point. An accredited, Wisconsin licensed real estate appraiser can certainly help. Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job! We are experts at analyzing value trends in Greendale, Milwaukee County, and surrounding areas, and we know when property values have risen or declined. Faced with data from an appraiser, the mortgage company will usually eliminate the PMI with little trouble. At which time, the homeowner can retain the savings from that point on.


	Did you secure your mortgage with less than 20% down? Call today at (414) 421-8208 to see if you can save money by removing your Private Mortgage Insurance premium.

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