Have equity in your home? Want a lower payment? An appraisal from C.D. McCullough Real Estate Appraisal can help you get rid of your PMI.

It's generally inferred that a 20% down payment is accepted when buying a house. The lender's risk is generally only the difference between the home value and the sum remaining on the loan, so the 20% adds a nice cushion against the charges of foreclosure, reselling the home, and regular value fluctuations on the chance that a purchaser is unable to pay.

The market was taking down payments as low as 10, 5 and often 0 percent during the mortgage boom of the mid 2000s. How does a lender endure the added risk of the low down payment? The answer is Private Mortgage Insurance or PMI. This supplemental policy guards the lender in the event a borrower defaults on the loan and the market price of the property is less than the balance of the loan.

Because the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and many times isn't even tax deductible, PMI is pricey to a borrower. It's profitable for the lender because they collect the money, and they get paid if the borrower defaults, separate from a piggyback loan where the lender takes in all the damages.

Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.

How can a homeowner keep from bearing the cost of PMI?

With the utilization of The Homeowners Protection Act of 1998, on most loans lenders are forced to automatically terminate the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount. Keen homeowners can get off the hook beforehand. The law guarantees that, upon request of the homeowner, the PMI must be abandoned when the principal amount equals just 80 percent.

It can take many years to get to the point where the principal is only 20% of the original loan amount, so it's important to know how your home has appreciated in value. After all, any appreciation you've achieved over the years counts towards removing PMI. So why pay it after the balance of your loan has dropped below the 80% mark? Your neighborhood may not be following the national trends and/or your home could have acquired equity before things calmed down, so even when nationwide trends hint at plunging home values, you should understand that real estate is local.

A certified, licensed real estate appraiser can help homeowners understand just when their home's equity goes over the 20% point, as it's a tough thing to know. As appraisers, it's our job to understand the market dynamics of our area. At C.D. McCullough Real Estate Appraisal, we know when property values have risen or declined. We're experts at determining value trends in Colton, San Bernardino County and surrounding areas. When faced with figures from an appraiser, the mortgage company will often eliminate the PMI with little trouble. At which time, the home owner can enjoy the savings from that point on.

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

Paying PMI?

Would you like to save money by not having to pay for Private Mortgage Insurance? We can help. Simply fill out the form below as completely as possible and we'll send you information on how to save PMI expenses, with no obligation to you. We guarantee your privacy.

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