Let Independent Appraisal help you decide if you can eliminate your PMIA 20% down payment is usually accepted when buying a house. Because the liability for the lender is oftentimes only the difference between the home value and the sum remaining on the loan, the 20% adds a nice cushion against the expenses of foreclosure, reselling the home, and regular value fluctuationson the chance that a borrower defaults. During the recent mortgage boom of the mid 2000s, it was customary to see lenders commanding down payments of 10, 5 or even 0 percent. How does a lender handle the increased risk of the small down payment? The answer is Private Mortgage Insurance or PMI. This additional plan guards the lender in the event a borrower defaults on the loan and the market price of the home is less than the loan balance. Because the $40-$50 a month per $100,000 borrowed is rolled into the mortgage payment and often isn't even tax deductible, PMI can be pricey to a borrower. Unlike a piggyback loan where the lender consumes all the damages, PMI is profitable for the lender because they acquire the money, and they receive payment if the borrower defaults. 
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How homeowners can refrain from bearing the cost of PMIThe Homeowners Protection Act of 1998 forces the lenders on most loans to automatically terminate the PMI when the principal balance of the loan reaches 78 percent of the primary loan amount. Smart homeowners can get off the hook sooner than expected. The law designates that, at the request of the homeowner, the PMI must be abandoned when the principal amount reaches only 80 percent. Because it can take many years to get to the point where the principal is just 20% of the initial amount of the loan, it's necessary to know how your home has increased in value. After all, any appreciation you've obtained over the years counts towards abolishing PMI. So what's the reason for paying it after your loan balance has dropped below the 80% threshold? Your neighborhood may not be reflecting the national trends and/or your home may have gained equity before things settled down, so even when nationwide trends predict plunging home values, you should realize that real estate is local. An accredited, licensed real estate appraiser can help homeowners understand just when their home's equity rises above the 20% point, as it's a difficult thing to know. It's an appraiser's job to know the market dynamics of their area. At Independent Appraisal, we're masters at pinpointing value trends in Hermosa Beach, Los Angeles County and surrounding areas, and we know when property values have risen or declined. When faced with data from an appraiser, the mortgage company will generally cancel the PMI with little trouble. At which time, the home owner can retain the savings from that point on.
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