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

A 20% down payment is typically the standard when getting a mortgage. The lender's liability is usually only the remainder between the home value and the sum due on the loan, so the 20% adds a nice buffer against the charges of foreclosure, selling the home again, and natural value fluctuations on the chance that a borrower is unable to pay.

Lenders were working with down payments as low as 10, 5 and often 0 percent during the mortgage boom of the mid 2000s. How does a lender manage the increased risk of the small down payment? The solution is Private Mortgage Insurance or PMI. This supplementary plan takes care of the lender in case a borrower doesn't pay on the loan and the value of the home is less than what is owed on the loan.

Because the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and often isn't even tax deductible, PMI can be pricey to a borrower. Opposite from a piggyback loan where the lender absorbs all the deficits, PMI is beneficial for the lender because they collect the money, and they receive payment if the borrower defaults.

Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.

How homeowners can prevent bearing the expense of PMI

With the implementation of The Homeowners Protection Act of 1998, on nearly all loans lenders are forced to automatically eliminate the PMI when the principal balance of the loan equals 78 percent of the primary loan amount. The law guarantees that, upon request of the homeowner, the PMI must be released when the principal amount equals only 80 percent. So, keen homeowners can get off the hook a little earlier.

It can take countless years to reach the point where the principal is only 20% of the original amount of the loan, so it's necessary to know how your home has increased in value. After all, all of the appreciation you've achieved over the years counts towards removing PMI. So why pay it after the balance of your loan has dropped below the 80% threshold? Your neighborhood may not be adopting the national trends and/or your home may have secured equity before things simmered down, so even when nationwide trends signify decreasing home values, you should realize that real estate is local.

The toughest thing for almost all home owners to know is just when their home's equity goes over the 20% point. A certified, licensed real estate appraiser can certainly help. As appraisers, it's our job to understand the market dynamics of our area. At TSH Real Estate and Appraisal Services, LLC, we're masters at pinpointing value trends in Kaneohe, Honolulu 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 usually remove the PMI with little anxiety. At which time, the homeowner can retain 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