Let Libertyville Savings Bank help you figure out if you can cancel your PMIWhen purchasing a home, a 20% down payment is typically the standard. The lender's risk is oftentimes only the difference between the home value and the sum outstanding on the loan, so the 20% provides a nice cushion against the costs of foreclosure, reselling the home, and regular value variations in the event a purchaser defaults. Banks were accepting down payments down to 10, 5 and often 0 percent in the peak of last decade's mortgage boom. How does a lender handle the added risk of the low down payment? The answer is Private Mortgage Insurance or PMI. PMI takes care of the lender in the event a borrower defaults on the loan and the worth of the home is lower than what is owed on the loan. 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 frequently isn't even tax deductible. It's beneficial for the lender because they collect the money, and they get paid if the borrower defaults, opposite 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 homeowners can prevent bearing the expense of PMIWith the employment of The Homeowners Protection Act of 1998, on nearly all loans lenders are obligated to automatically eliminate the PMI when the principal balance of the loan equals 78 percent of the original loan amount. The law guarantees that, upon request of the home owner, the PMI must be released when the principal amount reaches only 80 percent. So, wise home owners can get off the hook a little earlier. It can take countless years to get to the point where the principal is only 20% of the original amount of the loan, so it's necessary to know how your home has grown in value. After all, all of the appreciation you've acquired over the years counts towards abolishing PMI. So why should you pay it after the balance of your loan has fallen below the 80% mark? Despite the fact that nationwide trends forecast plummeting home values, realize that real estate is local. Your neighborhood might not be adhering to the national trends and/or your home may have acquired equity before things calmed down. A certified, licensed real estate appraiser can help home owners understand just when their home's equity rises above the 20% point, as it's a difficult thing to know. As appraisers, it's our job to recognize the market dynamics of our area. At Libertyville Savings Bank, we're experts at pinpointing value trends in Fairfield, 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 usually cancel the PMI with little anxiety. At that time, the home owner can enjoy the savings from that point on.
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