Premier Appraisal of SoCal can help you remove your Private Mortgage Insurance

When buying a house, a 20% down payment is usually the standard. The lender's liability is usually only the remainder between the home value and the sum outstanding on the loan, so the 20% supplies a nice cushion against the expenses of foreclosure, reselling the home, and typical value variations on the chance that a purchaser is unable to pay.

The market was taking down payments down to 10, 5 and often 0 percent during the mortgage boom of the mid 2000s. A lender is able to manage the added risk of the small down payment with Private Mortgage Insurance or PMI. This supplemental plan covers the lender in the event a borrower doesn't pay on the loan and the worth of the home is less than what the borrower still owes on the loan.

PMI can be costly to a borrower because the $40-$50 a month per $100,000 borrowed is lumped into the mortgage monthly payment and often isn't even tax deductible. Opposite from a piggyback loan where the lender consumes all the costs, PMI is lucrative for the lender because they secure the money, and they get paid if the borrower is unable to pay.

Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.

How can homeowners prevent 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 original loan amount. The law promises that, at the request of the homeowner, the PMI must be abandoned when the principal amount reaches just 80 percent. So, acute home owners can get off the hook sooner than expected.

It can take many years to get to the point where the principal is only 20% of the original loan amount, so it's necessary to know how your home has grown in value. After all, any appreciation you've gained over time counts towards abolishing PMI. So what's the reason for paying it after your loan balance has dropped below the 80% mark? Despite the fact that nationwide trends signify declining home values, realize that real estate is local. Your neighborhood might not be minding the national trends and/or your home may have acquired equity before things settled down.

An accredited, licensed real estate appraiser can help homeowners understand just when their home's equity rises above the 20% point, as it's a tough thing to know. It is an appraiser's job to recognize the market dynamics of their area. At Premier Appraisal of SoCal, we're experts at determining value trends in Mission Viejo, Orange 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 remove the PMI with little effort. At that time, the homeowner can retain the savings from that point on.

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