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The August Group Inc. can help you remove your Private Mortgage Insurance

It's typically inferred that a 20% down payment is accepted when getting a mortgage. The lender's liability is generally only the remainder between the home value and the sum due on the loan, so the 20% adds a nice buffer against the expenses of foreclosure, reselling the home, and natural value fluctuations in the event a purchaser is unable to pay.

During the recent mortgage boom of the last decade, it was widespread to see lenders taking down payments of 10, 5 or often 0 percent. A lender is able to manage the added risk of the small down payment with Private Mortgage Insurance or PMI. PMI covers the lender in case a borrower defaults on the loan and the worth of the home is less than the loan balance.

PMI can be costly to a borrower in that the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and generally isn't even tax deductible. It's advantageous for the lender because they obtain the money, and they get the money if the borrower defaults, separate from a piggyback loan where the lender consumes all the deficits.

Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.

How home owners can keep from bearing the expense of PMI

With the employment of The Homeowners Protection Act of 1998, on most loans lenders are required to automatically eliminate the PMI when the principal balance of the loan reaches 78 percent of the original 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 reaches just 80 percent.

It can take countless years to reach the point where the principal is just 20% of the initial amount borrowed, so it's important to know how your home has appreciated in value. After all, any appreciation you've achieved over the years counts towards dismissing PMI. So why should you pay it after the balance of your loan has fallen below the 80% mark? Your neighborhood might not be following the national trends and/or your home might have acquired equity before things cooled off, so even when nationwide trends forecast declining home values, you should realize that real estate is local.

The toughest thing for most home owners to understand 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 understand the market dynamics of their area. At The August Group Inc., we know when property values have risen or declined. We're experts at determining value trends in St Louis, Saint Louis County and surrounding areas. Faced with information from an appraiser, the mortgage company will usually eliminate the PMI with little trouble. At which time, the homeowner 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

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