Let WalshStreet Appraisals help you decide if you can get rid of your PMI

A 20% down payment is usually the standard when buying a house. The lender's only risk is usually just the difference between the home value and the amount remaining on the loan, so the 20% provides a nice cushion against the costs of foreclosure, reselling the home, and natural value variations on the chance that a borrower defaults.

The market was taking down payments as low as 10, 5 and often 0 percent in the peak of last decade's mortgage boom. A lender is able to endure the increased risk of the small down payment with Private Mortgage Insurance or PMI. This supplementary policy guards the lender in case a borrower doesn't pay on the loan and the value of the home is less than the loan balance.

Because the $40-$50 a month per $100,000 borrowed is rolled into the mortgage payment and on many occasions isn't even tax deductible, PMI can be expensive to a borrower. Instead of a piggyback loan where the lender consumes all the deficits, PMI is beneficial for the lender because they acquire the money, and they get paid if the borrower is unable to pay.


The savings from dropping your PMI pays for the appraisal in no time. WalshStreet Appraisals are experts when it comes to value trends in the city of Los Angeles and Los Angeles County. Contact us today.

How can homeowners avoid bearing the expense of PMI?

With the implementation of The Homeowners Protection Act of 1998, lenders are obligated to automatically cease the PMI when the principal balance of the loan equals 78 percent of the initial loan amount on nearly all loans. Wise home owners can get off the hook beforehand. The law designates that, at the request of the homeowner, the PMI must be abandoned when the principal amount equals just 80 percent.

It can take several years to arrive at the point where the principal is just 80% of the original amount of the loan, so it's important to know how your California home has increased in value. After all, any appreciation you've acquired over time counts towards dismissing PMI. So what's the reason for paying it after the balance of your loan has fallen below the 80% mark? Your neighborhood might not follow national trends and/or your home could have secured equity before things cooled off. So even when nationwide trends indicate declining home values, you should understand that real estate is local.

The hardest thing for almost all consumers to figure out is just when their home's equity rises above the 20% point. An accredited, California licensed real estate appraiser can definitely help. As appraisers, it's our job to understand the market dynamics of our area. At WalshStreet Appraisals, we know when property values have risen or declined. We're masters at identifying value trends in Los Angeles, Los Angeles County, and surrounding areas. Faced with figures from an appraiser, the mortgage company will generally remove the PMI with little trouble. At which time, the homeowner 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 save money by removing 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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