WalshStreet Appraisals can help you remove your Private Mortgage Insurance

A 20% down payment is usually the standard when getting a mortgage. Because the liability for the lender is usually only the difference between the home value and the amount remaining on the loan, the 20% adds a nice buffer against the costs of foreclosure, selling the home again, and typical value changes in the event a purchaser is unable to pay.

Lenders were accepting down payments as low as 10, 5 and often 0 percent in the peak of last decade's mortgage boom. How does a lender endure the added risk of the small down payment? The solution is Private Mortgage Insurance or PMI. PMI covers the lender in the event a borrower is unable to pay on the loan and the market price 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 rolled into the mortgage monthly payment and oftentimes isn't even tax deductible. It's money-making for the lender because they secure the money, and they get paid if the borrower defaults, separate from a piggyback loan where the lender absorbs all the losses.


Has your real estate appreciated since you first purchased? Call WalshStreet Appraisals today at 323-936-9970 to see if you can cancel your Private Mortgage Insurance premium.

How can a home buyer keep from bearing the cost of PMI?

The Homeowners Protection Act of 1998 forces the lenders on nearly all loans to automatically eliminate the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount. The law stipulates that, upon request of the homeowner, the PMI must be dropped when the principal amount equals only 80 percent. So, wise home owners can get off the hook ahead of time.

Since it can take several years to reach the point where the principal is only 80% of the original amount of the loan, it's crucial to know how your California home has appreciated in value. After all, all of the appreciation you've gained over the years counts towards removing PMI. So why should you pay it after the balance of your loan has dropped below the 80% threshold? Even when nationwide trends forecast falling home values, understand that real estate is local. Your neighborhood may not be reflecting the national trends and/or your home could have secured equity before things declined.

The difficult thing for most homeowners to determine is whether their home equity has exceeded the 20% point. An accredited, California licensed real estate appraiser can surely help. It's an appraiser's job to recognize the market dynamics of their area. At WalshStreet Appraisals, we know when property values have risen or declined. We're experts at pinpointing value trends in Los Angeles, Los Angeles County, and surrounding areas. When faced with information from an appraiser, the mortgage company will most often eliminate the PMI with little effort. At which time, the homeowner can relish the savings from that point on.


Does your monthly loan payment include a fee for PMI? Call WalshStreet Appraisals today at 323-936-9970 or send us an e-mail. A current appraisal could save you thousands.

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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