Johnson & Associates Appraisal Services can help you remove your Private Mortgage InsuranceIt's largely understood that a 20% down payment is the standard when purchasing a home. Because the liability for the lender is generally only the difference between the home value and the amount outstanding on the loan, the 20% adds a nice buffer against the costs of foreclosure, selling the home again, and typical value variationsin the event a borrower is unable to pay. During the recent mortgage boom of the last decade, it was widespread to see lenders taking down payments of 10, 5 or often 0 percent. How does a lender endure the additional risk of the small down payment? The solution is Private Mortgage Insurance or PMI. This added plan takes care of the lender in case a borrower is unable to pay on the loan and the market price of the house is less than what is owed on the loan. Since the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and oftentimes isn't even tax deductible, PMI is costly to a borrower. It's favorable for the lender because they acquire the money, and they receive payment if the borrower defaults, unlike a piggyback loan where the lender takes in all the losses. 
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How can a homeowner prevent paying PMI?The Homeowners Protection Act of 1998 makes the lenders on most loans to automatically stop the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount. The law pledges that, upon request of the home owner, the PMI must be abandoned when the principal amount reaches only 80 percent. So, keen homeowners can get off the hook ahead of time. It can take many years to arrive at the point where the principal is only 20% of the original amount borrowed, so it's important to know how your home has grown in value. After all, any appreciation you've accomplished over the years counts towards dismissing PMI. So what's the reason for paying it after the balance of your loan has fallen below the 80% threshold? Even when nationwide trends indicate declining home values, realize that real estate is local. Your neighborhood might not be following the national trends and/or your home could have gained equity before things calmed down. The difficult thing for most homeowners to know is just when their home's equity rises above the 20% point. An accredited, licensed real estate appraiser can surely help. As appraisers, it's our job to know the market dynamics of our area. At Johnson & Associates Appraisal Services, we're masters at determining value trends in Moreno Valley, Riverside County and surrounding areas, and we know when property values have risen or declined. When faced with information from an appraiser, the mortgage company will usually cancel the PMI with little anxiety. At which time, the homeowner can relish the savings from that point on.
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