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

A 20% down payment is typically accepted when purchasing a home. The lender's risk is oftentimes only the difference between the home value and the sum remaining on the loan, so the 20% adds a nice cushion against the expenses of foreclosure, reselling the home, and regular value variations on the chance that a purchaser is unable to pay.

Lenders were working with down payments discounted to 10, 5 and frequently 0 percent during the mortgage boom of the last decade. A lender is able to manage the added risk of the low down payment with Private Mortgage Insurance or PMI. PMI takes care of the lender if a borrower is unable to pay on the loan and the market price of the property is less than what the borrower still owes on the loan.

Because the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and frequently isn't even tax deductible, PMI is costly to a borrower. Different from a piggyback loan where the lender takes in all the costs, PMI is lucrative for the lender because they collect the money, and they get the money if the borrower defaults.

Is PMI included in your monthly house payment? 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.

How homeowners can keep from bearing the cost of PMI

The Homeowners Protection Act of 1998 forces the lenders on most loans to automatically eliminate the PMI when the principal balance of the loan reaches 78 percent of the primary loan amount. The law promises that, upon request of the homeowner, the PMI must be abandoned when the principal amount reaches just 80 percent. So, keen home owners can get off the hook sooner than expected.

Because it can take a significant number of years to arrive at the point where the principal is only 80% of the initial amount borrowed, it's necessary to know how your California home has appreciated in value. After all, all of the appreciation you've achieved over the years counts towards removing PMI. So why pay it after the balance of your loan has fallen below the 80% threshold? Your neighborhood might not follow national trends and/or your home could have gained equity before the economy declined. So even when nationwide trends hint at decreasing home values, you should know most importantly that real estate is local.

The hardest thing for almost all homeowners to determine is just when their home's equity goes over the 20% point. A certified, California licensed real estate appraiser can certainly help. It's an appraiser's job to know the market dynamics of their area. At WalshStreet Appraisals, we know when property values have risen or declined. We're experts at analyzing value trends in Los Angeles, Los Angeles County, and surrounding areas. Faced with data from an appraiser, the mortgage company will usually eliminate the PMI with little effort. At that time, the homeowner can enjoy 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 get rid of 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