Have equity in your home? Want a lower payment? An appraisal from WalshStreet Appraisals can help you get rid of your PMI.

It's largely known that a 20% down payment is accepted when getting a mortgage. Because the risk for the lender is usually only the difference between the home value and the amount due on the loan, the 20% supplies a nice buffer against the expenses of foreclosure, reselling the home, and regular value fluctuations on the chance that a borrower is unable to pay.

The market was working with down payments discounted to 10, 5 and often 0 percent in the peak of last decade's mortgage boom. How does a lender handle the additional risk of the small down payment? The solution is Private Mortgage Insurance or PMI. This supplemental policy takes care of the lender if a borrower defaults on the loan and the market price of the home is lower than the balance of the loan.

Because the $40-$50 a month per $100,000 borrowed is lumped into the mortgage monthly payment and frequently isn't even tax deductible, PMI can be costly to a borrower. As opposed to a piggyback loan where the lender absorbs all the costs, PMI is profitable for the lender because they obtain the money, and they get paid if the borrower doesn't pay.


Is PMI included in your monthly mortgage 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 can homebuyers avoid bearing the cost of PMI?

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

It can take several years to reach the point where the principal is just 80% of the initial amount of the loan, so it's essential to know how your California home has increased in value. After all, every bit of appreciation you've accomplished over time counts towards abolishing PMI. So why pay it after the balance of your loan has dropped below the 80% threshold? Even when nationwide trends signify falling home values, understand that real estate is local. Your neighborhood may not be heeding the national trends and/or your home might have gained equity before things simmered down.

The hardest thing for almost all people to determine is just when their home's equity rises above the 20% point. An accredited, California licensed real estate appraiser can surely help. It is an appraiser's job to understand the market dynamics of their area. At WalshStreet Appraisals, we're experts 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 data from an appraiser, the mortgage company will usually drop the PMI with little anxiety. At which time, the homeowner can retain the savings from that point on.


The savings from cancelling your PMI pays for the appraisal in a matter of months. WalshStreet Appraisals are experts when it comes to 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