Let WalshStreet Appraisals help you determine if you can eliminate your PMI

When purchasing a home, a 20% down payment is typically the standard. Since the risk for the lender is generally only the difference between the home value and the amount outstanding on the loan, the 20% adds a nice cushion against the charges of foreclosure, selling the home again, and natural value changes in the event a purchaser defaults.

During the recent mortgage boom of the last decade, it was common to see lenders only asking for down payments of 10, 5, 3 or even 0 percent. How does a lender handle the additional risk of the low down payment? The solution is Private Mortgage Insurance or PMI. PMI takes care of the lender in the event a borrower is unable to pay on the loan and the market price of the house is less than the balance of the loan.

PMI is costly to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and many times isn't even tax deductible. As opposed to a piggyback loan where the lender absorbs all the losses, PMI is favorable for the lender because they collect the money, and they get the money if the borrower defaults.


The savings from getting rid of the PMI required when you got your mortgage pays for 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 home owners can avoid paying PMI

The Homeowners Protection Act of 1998 forces the lenders on nearly all loans to automatically eliminate the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount. The law designates that, at the request of the homeowner, the PMI must be released when the principal amount equals just 80 percent. So, acute home owners can get off the hook sooner than expected.

It can take many years to arrive at the point where the principal is just 80% of the initial amount of the loan, so it's necessary to know how your California home has appreciated in value. After all, any appreciation you've accomplished over the years counts towards removing PMI. So why pay it after the balance of your loan has dropped below the 80% threshold? Even when nationwide trends forecast lower overall home values, be aware that real estate is local. Your neighborhood may not be heeding the national trends and/or your home might have acquired equity before things declined.

An accredited, California licensed real estate appraiser can help homeowners figure out if their equity has exceeed the 20% point, as it's a hard thing to know. As appraisers, it's our job to recognize the market dynamics of our area. At WalshStreet Appraisals, we're experts at pinpointing value trends in Los Angeles, Los Angeles County, and surrounding areas, and we know when property values have risen or declined. When faced with data from an appraiser, the mortgage company will generally do away with the PMI with little trouble. At which time, the home owner can delight in the savings from that point on.


Has your home value appreciated since you first purchased? Call WalshStreet Appraisals today at 323-936-9970. You may be able to cancel your Private Mortgage Insurance payment.

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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