WalshStreet Appraisals can help you remove your Private Mortgage Insurance

When purchasing a home, a 20% down payment is usually the standard. Considering the risk for the lender is generally only the remainder between the home value and the sum due on the loan, the 20% supplies a nice cushion against the expenses of foreclosure, selling the home again, and natural value changes on the chance that a purchaser defaults.

The market was taking down payments dropping to 10, 5 and even 0 percent during the mortgage boom of the mid 2000s. A lender is able to manage the additional risk of the low down payment with Private Mortgage Insurance or PMI. PMI covers the lender if 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.

Because the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and many times isn't even tax deductible, PMI is costly to a borrower. Unlike a piggyback loan where the lender consumes all the deficits, PMI is money-making for the lender because they secure the money, and they are covered if the borrower doesn't pay.


Is PMI a part of your monthly mortgage payment? Call WalshStreet Appraisals today at 323-936-9970 or send us an e-mail. A current appraisal could save you thousands.

How home owners can keep from bearing the cost of PMI

With the implementation of The Homeowners Protection Act of 1998, lenders are forced to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount on nearly all loans. Smart homeowners can get off the hook beforehand. The law promises that, upon request of the home owner, the PMI must be abandoned when the principal amount reaches only 80 percent.

It can take many years to reach the point where the principal is only 80% of the initial loan amount, so it's essential to know how your California home has increased in value. After all, every bit of appreciation you've acquired over time counts towards dismissing PMI. So why should you pay it after the balance of your loan has fallen below the 80% mark? Your neighborhood may not adhere to national trends and/or your home could have secured equity before things cooled off. So even when nationwide trends indicate decreasing home values, you should realize that real estate is local.

A certified, California licensed real estate appraiser can help home owners figure out just when their home's equity rises above the 20% point, as it's a hard thing to know. It's an appraiser's job to keep up with the market dynamics of their area. At WalshStreet Appraisals, we're masters at determining value trends in Los Angeles, Los Angeles County, and surrounding areas, and we know when property values have risen or declined. When faced with information from an appraiser, the mortgage company will generally cancel the PMI with little trouble. At which time, the home owner can enjoy the savings from that point on.


Has your home value appreciated since you first purchased? Contact 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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