WalshStreet Appraisals can help you remove your Private Mortgage Insurance

A 20% down payment is usually accepted when getting a mortgage. Because the liability for the lender is generally only the difference between the home value and the sum remaining on the loan, the 20% supplies a nice cushion against the expenses of foreclosure, selling the home again, and typical value changes in the event a purchaser defaults.

During the recent mortgage upturn of the mid 2000s, it was common to see lenders only asking for down payments of 10, 5, 3 or sometimes 0 percent. How does a lender endure the additional risk of the small down payment? The solution is Private Mortgage Insurance or PMI. This supplemental plan takes care of the lender in the event a borrower doesn't pay on the loan and the value of the property is lower than what the borrower still owes on the loan.

PMI is pricey to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and on many occasions isn't even tax deductible. Unlike a piggyback loan where the lender absorbs all the costs, PMI is lucrative for the lender because they acquire the money, and they receive payment if the borrower is unable to pay.


Did you secure your mortgage with less than 20% down? Contact WalshStreet Appraisals today at 323-936-9970. You may be able to get rid of your Private Mortgage Insurance premium.

How home owners can refrain from bearing the cost of PMI

The Homeowners Protection Act of 1998 requires the lenders on most loans to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount. Smart homeowners can get off the hook a little early. The law stipulates that, upon request of the homeowner, the PMI must be abandoned when the principal amount reaches only 80 percent.

Because it can take several years to reach the point where the principal is only 80% of the initial amount borrowed, it's crucial to know how your California home has appreciated in value. After all, any appreciation you've gained over time counts towards removing PMI. So why should you pay it after your loan balance has dropped below the 80% threshold? Your neighborhood might not conform to national trends and/or your home might have gained equity before things cooled off. So even when nationwide trends predict falling home values, you should realize that real estate is local.

The difficult thing for most homeowners to determine is whether their home equity has exceeded the 20% point. A certified, California licensed real estate appraiser can surely help. As appraisers, it's our job to understand the market dynamics of our area. At WalshStreet Appraisals, we're masters at pinpointing value trends in Los Angeles, Los Angeles County, and surrounding areas, and we know when property values have risen or declined. Faced with information from an appraiser, the mortgage company will often eliminate the PMI with little anxiety. At that time, the homeowner can enjoy the savings from that point on.


The savings from getting rid of your PMI pays for the appraisal in a matter of months. WalshStreet Appraisals has years of experience with real estate value trends 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