Let All City Appraisal help you decide if you can get rid of your PMIWhen buying a house, a 20% down payment is typically the standard. Since the risk for the lender is usually only the difference between the home value and the amount outstanding on the loan, the 20% adds a nice cushion against the charges of foreclosure, reselling the home, and regular value changesin the event a purchaser is unable to pay. Banks were taking 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 endure the additional risk of the reduced down payment with Private Mortgage Insurance or PMI. PMI covers the lender if a borrower is unable to pay on the loan and the market price of the property is lower than what is owed on the loan. PMI can be costly to a borrower in that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and frequently isn't even tax deductible. Unlike a piggyback loan where the lender absorbs all the losses, PMI is favorable for the lender because they collect the money, and they get the money 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 buyers avoid 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 equals 78 percent of the primary loan amount. The law designates that, upon request of the homeowner, the PMI must be abandoned when the principal amount reaches only 80 percent. So, acute home owners can get off the hook sooner than expected. It can take countless years to reach the point where the principal is only 20% of the initial loan amount, so it's essential to know how your home has appreciated in value. After all, all of the appreciation you've acquired over the years counts towards dismissing PMI. So why pay it after the balance of your loan has fallen below the 80% mark? Despite the fact that nationwide trends indicate declining home values, be aware that real estate is local. Your neighborhood may not be following the national trends and/or your home may have gained equity before things simmered down. The hardest thing for most home owners to know is just when their home's equity rises above the 20% point. An accredited, licensed real estate appraiser can surely help. It's an appraiser's job to recognize the market dynamics of their area. At All City Appraisal, we're experts at recognizing value trends in Woodland Hills, Los Angeles County and surrounding areas, and we know when property values have risen or declined. Faced with figures from an appraiser, the mortgage company will often do away with the PMI with little trouble. At that time, the homeowner can relish the savings from that point on.
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