Appraisal And You can help you remove your Private Mortgage Insurance

It's widely understood that a 20% down payment is common when purchasing a home. The lender's only exposure is generally just the difference between the home value and the balance outstanding on the loan, so the 20% provides a nice cushion against the costs of foreclosure, selling the home again, and natural value changes on the chance that a purchaser is unable to pay.

The market was working with down payments as low as 10, 5 and even 0 percent in the peak of last decade's mortgage boom. A lender is able to manage the additional risk of the reduced down payment with Private Mortgage Insurance or PMI. PMI guards the lender in case a borrower doesn't pay on the loan and the value of the house is lower than the loan balance.

Since the $40-$50 a month per $100,000 borrowed is rolled into the mortgage payment and many times isn't even tax deductible, PMI can be costly to a borrower. It's favorable for the lender because they acquire the money, and they are covered if the borrower defaults, as opposed to a piggyback loan where the lender consumes all the losses.


	The savings from cancelling the PMI required when you got your mortgage pays for the appraisal in no time. Appraisal And You are experts when it comes to value trends in the city of Merced and Merced County. Contact us today.

How can home owners refrain from bearing the expense 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 reaches 78 percent of the initial loan amount. The law promises that, upon request of the home owner, the PMI must be released when the principal amount equals just 80 percent. So, acute homeowners can get off the hook ahead of time.

Since it can take many years to get to the point where the principal is just 80% of the initial amount borrowed, it's necessary to know how your California home has grown in value. After all, any appreciation you've achieved over time counts towards removing PMI. So why should you pay it after the balance of your loan has fallen below the 80% threshold? Even when nationwide trends signify decreasing home values, understand that real estate is local. Your neighborhood might not be minding the national trends and/or your home might have secured equity before things simmered down.

A certified, California licensed real estate appraiser can help home owners figure out if their equity has reached the 20% point, as it's a hard thing to know. It's an appraiser's job to know the market dynamics of their area. At Appraisal And You, we know when property values have risen or declined. We're masters at pinpointing value trends in Merced, Merced County, and surrounding areas. Faced with figures from an appraiser, the mortgage company will generally cancel the PMI with little effort. At that time, the homeowner can retain the savings from that point on.


	Is PMI a lineitem in your monthly house payment? Call Appraisal And You today at 209-722-6283 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