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Zacour & Associates, Inc. can help you remove your Private Mortgage Insurance

A 20% down payment is usually the standard when getting a mortgage. Considering the liability for the lender is often only the difference between the home value and the sum remaining on the loan, the 20% supplies a nice buffer against the costs of foreclosure, reselling the home, and natural value variationsin the event a borrower defaults.

During the recent mortgage upturn of the last decade, it became common to see lenders requiring down payments of 10, 5 or even 0 percent. A lender is able to endure the additional risk of the low down payment with Private Mortgage Insurance or PMI. PMI covers the lender in case a borrower defaults on the loan and the market price of the home is lower than the balance of the loan.

Because the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and often isn't even tax deductible, PMI can be costly to a borrower. Different from a piggyback loan where the lender absorbs all the damages, PMI is lucrative for the lender because they secure the money, and they get the money 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 home owners can prevent bearing the expense of PMI

With the implementation of The Homeowners Protection Act of 1998, on most loans lenders are obligated to automatically terminate the PMI when the principal balance of the loan reaches 78 percent of the initial loan amount. Keen home owners can get off the hook ahead of time. The law designates that, at the request of the homeowner, the PMI must be released when the principal amount equals only 80 percent.

It can take many years to arrive at the point where the principal is only 20% of the initial amount of the loan, so it's crucial to know how your home has grown in value. After all, any appreciation you've obtained over time counts towards removing PMI. So what's the reason for paying it after the balance of your loan has dropped below the 80% mark? Even when nationwide trends forecast declining home values, understand that real estate is local. Your neighborhood may not be minding the national trends and/or your home might have gained equity before things settled down.

The toughest thing for almost all homeowners to understand is just when their home's equity goes over the 20% point. An accredited, licensed real estate appraiser can definitely help. As appraisers, it's our job to understand the market dynamics of our area. At Zacour & Associates, Inc., we know when property values have risen or declined. We're masters at pinpointing value trends in El Paso, El Paso County and surrounding areas. When faced with data from an appraiser, the mortgage company will most often eliminate the PMI with little trouble. At which time, the home owner can enjoy 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