Appraisal Care can help you remove your Private Mortgage Insurance

A 20% down payment is usually the standard when purchasing a home. The lender's only risk is typically just the remainder between the home value and the sum due on the loan, so the 20% provides a nice buffer against the costs of foreclosure, reselling the home, and typical value fluctuations on the chance that a purchaser defaults.

During the recent mortgage boom that our country recently experienced, it became widespread to see lenders reducing down payments to 10, 5, 3 or even 0 percent. How does a lender endure the increased risk of the low down payment? The solution is Private Mortgage Insurance or PMI. PMI covers the lender if 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 bundled into the mortgage payment and on many occasions isn't even tax deductible, PMI can be expensive to a borrower. Different from a piggyback loan where the lender consumes all the damages, PMI is beneficial for the lender because they obtain the money, and they receive payment if the borrower doesn't pay.


	The savings from dropping your PMI pays for the appraisal in a matter of months. Nobody is more qualified than Appraisal Care when it comes to appreciating values in the city of Long Beach and Los Angeles County. Contact us today.

How homebuyers can refrain from bearing the expense of PMI

The Homeowners Protection Act of 1998 obligates the lenders on most 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 homeowner, the PMI must be dropped when the principal amount reaches just 80 percent. So, smart homeowners can get off the hook sooner than expected.

It can take several years to arrive at the point where the principal is just 80% of the initial loan amount, so it's crucial to know how your California home has grown in value. After all, every bit of appreciation you've accomplished over time counts towards abolishing PMI. So what's the reason for paying it after the balance of your loan has fallen below the 80% threshold? Your neighborhood may not follow national trends and/or your home may have gained equity before the economy simmered down. So even when nationwide trends signify a reduction in home values, you should realize that real estate is local.

The toughest thing for most people to determine is whether their home equity has exceeded the 20% point. A certified, California licensed real estate appraiser can definitely help. Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job! At Appraisal Care, we're masters at determining value trends in Long Beach, Los Angeles County, and surrounding areas, and we know when property values have risen or declined. When faced with figures from an appraiser, the mortgage company will generally cancel the PMI with little trouble. At that time, the homeowner can enjoy the savings from that point on.


	The savings from getting rid of your PMI pays for the appraisal in no time. Appraisal Care is in the business of tracking value trends in Long Beach 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