Let Crochen & Associates help you determine if you can cancel your PMI

A 20% down payment is usually the standard when purchasing a home. Since the liability for the lender is generally only the difference between the home value and the amount due on the loan, the 20% provides a nice buffer against the expenses of foreclosure, reselling the home, and natural value changes in the event a purchaser defaults.

Banks were accepting down payments discounted to 10, 5 and often 0 percent during the mortgage boom of the last decade. How does a lender handle the added risk of the small down payment? The solution is Private Mortgage Insurance or PMI. This added plan covers the lender in the event a borrower defaults on the loan and the value of the house is less than the balance of the loan.

Because the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and frequently isn't even tax deductible, PMI is pricey to a borrower. It's advantageous for the lender because they acquire the money, and they are covered if the borrower is unable to pay, in contrast to a piggyback loan where the lender consumes all the costs.


	The money you keep from dropping the PMI required when you got your mortgage will make up for the cost of the appraisal in a matter of months. Nobody is more qualified than Crochen & Associates when it comes to appreciating values in the city of Birmingham and Jefferson County. Contact us today.

How homebuyers can keep from paying PMI

With the passage of The Homeowners Protection Act of 1998, lenders are forced to automatically stop the PMI when the principal balance of the loan reaches 78 percent of the primary loan amount on nearly all loans. Savvy homeowners can get off the hook a little earlier. The law stipulates that, upon request of the homeowner, the PMI must be abandoned when the principal amount reaches only 80 percent.

It can take several years to arrive at the point where the principal is only 80% of the initial loan amount, so it's important to know how your Alabama home has increased in value. After all, all of the appreciation you've achieved over the years 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 indicate declining home values, realize that real estate is local. Your neighborhood might not be heeding the national trends and/or your home could have secured equity before things declined.

A certified, Alabama licensed real estate appraiser can help home owners figure out if their equity has reached the 20% point, as it's a tough thing to know. It is an appraiser's job to know the market dynamics of their area. At Crochen & Associates, we're experts at analyzing value trends in Birmingham, Jefferson 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 most often do away with the PMI with little anxiety. At that time, the homeowner can relish the savings from that point on.


	Is PMI a lineitem in your monthly house payment? Call Crochen & Associates today at (205)563-1941 or send us an e-mail. A new appraisal could save you thousands.

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