Have equity in your home? Want a lower payment? An appraisal from Buenaventura Appraisal Company can help you get rid of your PMI.A 20% down payment is usually the standard when getting a mortgage. The lender's only exposure is typically just the remainder between your home's value and the balance remaining your loan, so the 20% adds a cushion against the charges of foreclosure, having to re-sell the home again, and regular value variations on the chance that a purchaser is unable to pay.
During the mortgage boom of the mid 2000's, many lenders were accepting down payments as low as zero percent. How does a lender endure the increased risk of such a small down payment? The solution is Private Mortgage Insurance or PMI. PMI guards the lender in case a borrower defaults on the loan and the value of the house is lower than what the borrower still owes on the loan.
Because the $40-$50 a month per $100,000 borrowed is folded into your mortgage payment, PMI can end up be quite expensive. You can't even use this as a tax write-off.
How can a home owner avoid bearing the cost of PMI?The Homeowners Protection Act of 1998 forces the lenders on most loans to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the original loan amount. The law designates that, upon request of the home owner, the PMI must be released when the principal amount equals just 80 percent. So, wise homeowners can get off the hook a little early.
It can take many years to arrive at the point where the principal is only 80% of the initial amount borrowed, so it's important to know how your California home has appreciated in value. After all, any appreciation you've acquired over the years counts towards dismissing PMI. So what's the reason for paying it after the balance of your loan has dropped below the 80% mark? Even when nationwide trends forecast falling home values, be aware that real estate is local. Your neighborhood might not be following the national trends and/or your home could have acquired equity before things simmered down.
The difficult thing for many homeowners to determine is whether their home equity has exceeded the 20% point. As a California certified real estate appraiser, I can help. As a certified appraiser, it's my job to understand the market dynamics of our area. At Buenaventura Appraisal Company, I know when property values have risen or declined. I am an expert at analyzing value trends in Camarillo County, and surrounding areas. Faced with data from a state-certified appraiser, the mortgage company will have no choice but eliminate your PMI.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: