Let WalshStreet Appraisals help you decide if you can cancel your PMI

A 20% down payment is typically the standard when getting a mortgage. The lender's risk is often only the remainder between the home value and the balance due on the loan, so the 20% provides a nice buffer against the charges of foreclosure, reselling the home, and regular value changes on the chance that a borrower doesn't pay.

During the recent mortgage upturn of the last decade, it was common to see lenders making deals with down payments of 10, 5, 3 or often 0 percent. A lender is able to handle the additional risk of the low down payment with Private Mortgage Insurance or PMI. PMI protects the lender if a borrower doesn't pay on the loan and the value of the house is less than what the borrower still owes on the loan.

Since the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and on many occasions isn't even tax deductible, PMI is costly to a borrower. It's profitable for the lender because they collect the money, and they receive payment if the borrower defaults, as opposed to a piggyback loan where the lender consumes all the costs.


The savings from getting rid of the PMI required when you got your mortgage will make up for the cost of the appraisal in no time. Nobody is more qualified than WalshStreet Appraisals when it comes to appreciating values in the city of Los Angeles and Los Angeles County. Contact us today.

How can homebuyers avoid bearing the expense of PMI?

The Homeowners Protection Act of 1998 forces the lenders on the majority of loans to automatically stop the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount. The law guarantees that, at the request of the home owner, the PMI must be dropped when the principal amount equals just 80 percent. So, acute home owners can get off the hook a little early.

It can take several years to reach the point where the principal is just 80% of the initial loan amount, so it's important to know how your California home has increased in value. After all, every bit of appreciation you've achieved over the years counts towards removing PMI. So why should you pay it after the balance of your loan has dropped below the 80% mark? Your neighborhood might not adhere to national trends and/or your home could have acquired equity before the economy cooled off. So even when nationwide trends predict decreasing home values, you should understand that real estate is local.

A certified, California licensed real estate appraiser can help homeowners figure out if their equity has reached the 20% point, as it's a difficult thing to know. It is an appraiser's job to understand the market dynamics of their area. At WalshStreet Appraisals, we're masters at recognizing value trends in Los Angeles, Los Angeles County, and surrounding areas, and we know when property values have risen or declined. When faced with figures from an appraiser, the mortgage company will often eliminate the PMI with little effort. At that time, the home owner can enjoy the savings from that point on.


Does your monthly loan payment include a fee for PMI? Call WalshStreet Appraisals today at 323-936-9970 or send us an e-mail. Documentation of your home's present value 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