WalshStreet Appraisals can help you remove your Private Mortgage Insurance

It's widely inferred that a 20% down payment is the standard when purchasing a home. The lender's only exposure is usually just the remainder between the home value and the sum outstanding on the loan, so the 20% adds a nice cushion against the charges of foreclosure, selling the home again, and regular value fluctuations in the event a borrower is unable to pay.

During the recent mortgage upturn of the last decade, it became common to see lenders only asking for down payments of 10, 5, 3 or often 0 percent. A lender is able to handle the additional risk of the reduced down payment with Private Mortgage Insurance or PMI. PMI covers the lender in case a borrower doesn't pay on the loan and the market price of the property is less than the loan balance.

PMI can be costly to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and frequently isn't even tax deductible. It's money-making for the lender because they acquire the money, and they receive payment if the borrower defaults, in contrast to a piggyback loan where the lender takes in all the losses.


Does your monthly mortgage payment have a lineitem for PMI? Call WalshStreet Appraisals today at 323-936-9970 or send us an e-mail. A recent appraisal could save you thousands.

How can a home buyer refrain from bearing the expense of PMI?

The Homeowners Protection Act of 1998 requires the lenders on most loans to automatically eliminate the PMI when the principal balance of the loan reaches 78 percent of the primary loan amount. Acute homeowners can get off the hook sooner than expected. The law designates that, at the request of the homeowner, the PMI must be dropped when the principal amount equals just 80 percent.

It can take many years to arrive at the point where the principal is only 80% of the original loan amount, so it's important to know how your California home has increased in value. After all, any appreciation you've acquired over the years counts towards abolishing PMI. So what's the reason for paying it after the balance of your loan has fallen below the 80% threshold? Even when nationwide trends forecast decreasing home values, understand that real estate is local. Your neighborhood might not be adopting the national trends and/or your home could have acquired equity before things cooled off.

The toughest thing for almost all people to figure out is whether their home equity has exceeded the 20% point. An accredited, California licensed real estate appraiser can definitely help. It's an appraiser's job to understand 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. Faced with information from an appraiser, the mortgage company will generally do away with the PMI with little trouble. At which time, the home owner can delight in the savings from that point on.


Does your monthly mortgage payment include a fee for PMI? Call WalshStreet Appraisals today at 323-936-9970 or send us an e-mail. A new 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