Let Derby City Homes & Development LLC help you determine if you can eliminate your PMIWhen purchasing a home, a 20% down payment is usually the standard. The lender's risk is oftentimes only the difference between the home value and the amount due on the loan, so the 20% provides a nice buffer against the charges of foreclosure, selling the home again, and regular value fluctuations on the chance that a borrower doesn't pay. The market was accepting down payments down to 10, 5 and even 0 percent during the mortgage boom of the last decade. A lender is able to endure the increased risk of the small down payment with Private Mortgage Insurance or PMI. This supplementary plan takes care of the lender if a borrower doesn't pay on the loan and the value of the property is less than what is owed on the loan. PMI is pricey to a borrower in that the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and frequently isn't even tax deductible. Opposite from a piggyback loan where the lender takes in all the losses, PMI is lucrative for the lender because they secure the money, and they get paid if the borrower doesn't pay. 
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How home owners can avoid paying PMIThe Homeowners Protection Act of 1998 forces the lenders on most loans to automatically cancel the PMI when the principal balance of the loan reaches 78 percent of the initial loan amount. Smart homeowners can get off the hook beforehand. The law states that, upon request of the homeowner, the PMI must be dropped when the principal amount equals only 80 percent. It can take many years to reach the point where the principal is just 20% of the original amount borrowed, so it's important to know how your home has appreciated in value. After all, every bit of appreciation you've obtained over the years counts towards abolishing PMI. So what's the reason for paying it after your loan balance has dropped below the 80% threshold? Even when nationwide trends predict plunging home values, understand that real estate is local. Your neighborhood might not be following the national trends and/or your home might have secured equity before things simmered down. The toughest thing for many homeowners to know is just when their home's equity goes over the 20% point. An accredited, licensed real estate appraiser can surely help. It's an appraiser's job to recognize the market dynamics of their area. At Derby City Homes & Development LLC, we know when property values have risen or declined. We're masters at pinpointing value trends in Louisville, Jefferson County and surrounding areas. When faced with data from an appraiser, the mortgage company will most often remove the PMI with little effort. At which time, the home owner can relish the savings from that point on.
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