Let Michael Hodges Appraisals, Inc. help you figure out if you can eliminate your PMI

When purchasing a home, a 20% down payment is typically the standard. Considering the risk for the lender is often only the remainder between the home value and the sum outstanding on the loan, the 20% supplies a nice buffer against the charges of foreclosure, selling the home again, and typical value variations in the event a purchaser defaults.

Lenders were accepting down payments dropping to 10, 5 and frequently 0 percent during the mortgage boom of the mid 2000s. How does a lender endure the added risk of the low down payment? The solution is Private Mortgage Insurance or PMI. This added policy guards the lender in case a borrower is unable to pay on the loan and the value of the home is less than what the borrower still owes on the loan.

PMI can be costly to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and often isn't even tax deductible. It's profitable for the lender because they obtain the money, and they receive payment if the borrower doesn't pay, as opposed to a piggyback loan where the lender takes in all the losses.


The money you keep from dropping the PMI required when you got your mortgage will make up for the price of the appraisal in no time. Michael Hodges Appraisals, Inc. has years of experience with value trends in the city of Dardanelle and Pope County. Contact us today.

How home owners can refrain from bearing the expense of PMI

The Homeowners Protection Act of 1998 makes the lenders on the majority of loans to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the original loan amount. Keen home owners can get off the hook ahead of time. The law states that, upon request of the home owner, the PMI must be released when the principal amount reaches just 80 percent.

Considering it can take many years to get to the point where the principal is just 80% of the initial amount of the loan, it's necessary to know how your Arkansas home has appreciated in value. After all, any appreciation you've gained over the years counts towards removing PMI. So why pay it after your loan balance has fallen below the 80% threshold? Your neighborhood may not follow national trends and/or your home may have secured equity before the economy simmered down. So even when nationwide trends hint at falling home values, you should know most importantly that real estate is local.

A certified, Arkansas licensed real estate appraiser can help home owners figure out just when their home's equity goes over the 20% point, as it's a difficult thing to know. It's an appraiser's job to understand the market dynamics of their area. At Michael Hodges Appraisals, Inc., we're masters at recognizing value trends in Dardanelle, Pope County, and surrounding areas, and we know when property values have risen or declined. Faced with figures from an appraiser, the mortgage company will most often drop the PMI with little trouble. At which time, the homeowner can delight in the savings from that point on.


The savings from dropping the PMI required when you got your mortgage will make up for the price of the appraisal in a matter of months. Nobody is more qualified than Michael Hodges Appraisals, Inc. when it comes to appreciating values in Dardanelle and Pope 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