North Metro Appraisal Service, Inc. can help you remove your Private Mortgage Insurance

A 20% down payment is usually accepted when purchasing a home. The lender's liability is usually only the difference between the home value and the amount remaining on the loan, so the 20% supplies a nice buffer against the expenses of foreclosure, reselling the home, and typical value changes in the event a purchaser defaults.

During the recent mortgage boom of the mid 2000s, it was widespread to see lenders only asking for down payments of 10, 5 or sometimes 0 percent. How does a lender endure the additional risk of the small down payment? The answer is Private Mortgage Insurance or PMI. This supplemental policy protects the lender in case a borrower defaults on the loan and the market price of the home is less than what the borrower still owes on the loan.

PMI is pricey to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and often isn't even tax deductible. Instead of a piggyback loan where the lender takes in all the costs, PMI is money-making for the lender because they collect the money, and they get paid if the borrower defaults.


Is PMI included in your monthly mortgage payment? Call North Metro Appraisal Service, Inc. today at (763)458-3472 or send us an e-mail. A current appraisal could save you thousands.

How can homebuyers prevent paying PMI?

With the implementation of The Homeowners Protection Act of 1998, lenders are forced to automatically stop the PMI when the principal balance of the loan equals 78 percent of the initial loan amount on nearly all loans. The law stipulates that, at the request of the home owner, the PMI must be abandoned when the principal amount reaches just 80 percent. So, acute home owners can get off the hook a little early.

Considering it can take a significant number of years to get to the point where the principal is just 80% of the original amount borrowed, it's important to know how your Minnesota home has increased in value. After all, all of the appreciation you've accomplished over time counts towards abolishing PMI. So why should you pay it after the balance of your loan has dropped below the 80% threshold? Even when nationwide trends forecast falling home values, understand that real estate is local. Your neighborhood might not be adopting the national trends and/or your home could have acquired equity before things simmered down.

An accredited, Minnesota licensed real estate appraiser can help homeowners figure out just when their home's equity goes over the 20% point, as it's a hard thing to know. It is an appraiser's job to understand the market dynamics of their area. At North Metro Appraisal Service, Inc., we're experts at analyzing value trends in Andover, Anoka County, and surrounding areas, and we know when property values have risen or declined. Faced with figures from an appraiser, the mortgage company will usually eliminate the PMI with little trouble. At which time, the home owner can relish the savings from that point on.


The savings from cancelling your PMI will make up for the price of the appraisal in a matter of months. North Metro Appraisal Service, Inc. stays current with value trends in Andover and Anoka 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