WalshStreet Appraisals can help you remove your Private Mortgage Insurance

It's widely understood that a 20% down payment is common when getting a mortgage. The lender's risk is usually only the difference between the home value and the sum due on the loan, so the 20% provides a nice cushion against the charges of foreclosure, selling the home again, and typical value changes in the event a purchaser doesn't pay.

The market was accepting down payments dropping to 10, 5 and frequently 0 percent during the mortgage boom of the mid 2000s. A lender is able to endure the additional risk of the small down payment with Private Mortgage Insurance or PMI. PMI protects the lender in the event a borrower defaults on the loan and the value of the home is lower than what the borrower still owes on the loan.

Since the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and many times isn't even tax deductible, PMI can be expensive to a borrower. Different from a piggyback loan where the lender takes in all the deficits, PMI is beneficial for the lender because they acquire the money, and they get the money if the borrower doesn't pay.


The savings from getting rid of your PMI will make up for the price of 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 keep from bearing the cost of PMI?

With the implementation of The Homeowners Protection Act of 1998, lenders are required to automatically stop the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount on nearly all loans. Savvy home owners can get off the hook a little early. The law states that, at the request of the homeowner, the PMI must be abandoned when the principal amount reaches only 80 percent.

It can take a significant number of years to arrive at 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 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 may have gained equity before things declined. So even when nationwide trends predict falling home values, you should understand that real estate is local.

The difficult thing for many consumers to figure out is just when their home's equity rises above the 20% point. A certified, California licensed real estate appraiser can definitely help. It is an appraiser's job to know the market dynamics of their area. At WalshStreet Appraisals, we're experts at analyzing value trends in Los Angeles, Los Angeles County, and surrounding areas, and we know when property values have risen or declined. Faced with data from an appraiser, the mortgage company will usually drop the PMI with little effort. At that time, the homeowner can retain the savings from that point on.


The savings from getting rid of your PMI pays for the appraisal in a matter of months. Nobody is more qualified than WalshStreet Appraisals when it comes to appreciating values in Los Angeles and Los Angeles County. Contact us today.

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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