Let Kordik & Associates, Inc. help you figure out if you can eliminate your PMIIt's typically understood that a 20% down payment is accepted when buying a house. Considering the risk for the lender is oftentimes only the remainder between the home value and the amount outstanding on the loan, the 20% provides a nice cushion against the charges of foreclosure, selling the home again, and natural value fluctuationsin the event a purchaser defaults. During the recent mortgage upturn of the last decade, it became common to see lenders requiring down payments of 10, 5 or sometimes 0 percent. How does a lender manage the increased risk of the small down payment? The solution is Private Mortgage Insurance or PMI. PMI guards the lender in the event a borrower is unable to pay on the loan and the market price of the property is less than what is owed on the loan. PMI is costly to a borrower in that the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and oftentimes isn't even tax deductible. It's beneficial for the lender because they acquire the money, and they receive payment if the borrower doesn't pay, separate from a piggyback loan where the lender absorbs all the losses. 
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How can homebuyers refrain from paying PMI?The Homeowners Protection Act of 1998 forces the lenders on nearly all loans to automatically eliminate the PMI when the principal balance of the loan equals 78 percent of the original loan amount. The law stipulates that, upon request of the homeowner, the PMI must be abandoned when the principal amount reaches only 80 percent. So, keen home owners can get off the hook sooner than expected. 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 crucial to know how your home has appreciated in value. After all, every bit of appreciation you've gained over time counts towards removing PMI. So what's the reason for paying it after your loan balance has fallen below the 80% threshold? Your neighborhood may not be heeding the national trends and/or your home may have acquired equity before things cooled off, so even when nationwide trends predict declining home values, you should realize that real estate is local. The hardest thing for almost all homeowners to understand is just when their home's equity goes over the 20% point. A certified, licensed real estate appraiser can certainly help. It is an appraiser's job to understand the market dynamics of their area. At Kordik & Associates, Inc., we know when property values have risen or declined. We're masters at analyzing value trends in Elmhurst, Dupage County and surrounding areas. Faced with figures from an appraiser, the mortgage company will generally eliminate the PMI with little trouble. At that time, the home owner can relish the savings from that point on.
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