Mitchell Appraisals can help you remove your Private Mortgage Insurance

When getting a mortgage, a 20% down payment is usually the standard. The lender's risk is often only the remainder between the home value and the sum remaining on the loan, so the 20% adds a nice buffer against the charges of foreclosure, reselling the home, and regular value variations on the chance that a borrower doesn't pay.

During the recent mortgage upturn of the mid 2000s, it became customary to see lenders making deals with down payments of 10, 5, 3 or even 0 percent. How does a lender manage the additional risk of the small down payment? The answer is Private Mortgage Insurance or PMI. PMI takes care of the lender in case a borrower is unable to pay on the loan and the market price of the home is lower than what the borrower still owes on the loan.

PMI is pricey to a borrower in that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage monthly payment and many times isn't even tax deductible. It's advantageous for the lender because they collect the money, and they get the money if the borrower doesn't pay, separate from a piggyback loan where the lender absorbs all the losses.


	The savings from dropping your PMI will make up for the price of the appraisal in a matter of months. Nobody is more qualified than Mitchell Appraisals when it comes to appreciating values in the city of Navarre and Santa Rosa County. Contact us today.

How can buyers prevent paying PMI?

With the passage of The Homeowners Protection Act of 1998, lenders are obligated to automatically eliminate the PMI when the principal balance of the loan equals 78 percent of the initial loan amount on most loans. The law states that, at the request of the home owner, the PMI must be released when the principal amount equals just 80 percent. So, savvy homeowners can get off the hook a little earlier.

Because it can take a significant number of years to get to the point where the principal is only 80% of the initial amount borrowed, it's crucial to know how your Florida home has appreciated in value. After all, any appreciation you've acquired over time counts towards removing PMI. So why pay it after your loan balance has dropped below the 80% mark? Your neighborhood may not adhere to national trends and/or your home could have secured equity before the economy simmered down. So even when nationwide trends hint at falling home values, you should understand that real estate is local.

The difficult thing for many people to determine is whether their home equity has exceeded the 20% point. A certified, Florida licensed real estate appraiser can surely help. It's an appraiser's job to understand the market dynamics of their area. At Mitchell Appraisals, we know when property values have risen or declined. We're masters at analyzing value trends in Navarre, Santa Rosa County, and surrounding areas. When faced with information from an appraiser, the mortgage company will generally drop the PMI with little anxiety. At which time, the home owner can relish the savings from that point on.


	The savings from dropping the PMI required when you got your mortgage pays for the appraisal in a matter of months. Nobody is more qualified than Mitchell Appraisals when it comes to appreciating values in Navarre and Santa Rosa County. Contact us today.

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