Have equity in your home? Want a lower payment? An appraisal from Fair Values can help you get rid of your PMI.

When buying a house, a 20% down payment is usually the standard. Considering the liability for the lender is generally only the remainder between the home value and the amount remaining on the loan, the 20% supplies a nice cushion against the costs of foreclosure, reselling the home, and typical value variations in the event a borrower defaults.

Banks were taking down payments dropping to 10, 5 and often 0 percent during the mortgage boom of the last decade. How does a lender manage the added risk of the low down payment? The solution is Private Mortgage Insurance or PMI. This supplementary plan protects the lender in case a borrower is unable to pay on the loan and the market price of the home is lower than the balance of the loan.

PMI can be pricey to a borrower in that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage monthly payment and oftentimes isn't even tax deductible. Unlike a piggyback loan where the lender takes in all the deficits, PMI is advantageous for the lender because they acquire the money, and they receive payment if the borrower defaults.


	Is PMI included in your monthly house payment? Call Fair Values today at 714.351.1440 or send us an e-mail. A new appraisal could save you thousands.

How can home buyers refrain from bearing the expense of PMI?

With the passage of The Homeowners Protection Act of 1998, lenders are required to automatically terminate the PMI when the principal balance of the loan reaches 78 percent of the primary loan amount on nearly all loans. Savvy homeowners can get off the hook ahead of time. The law promises that, at the request of the homeowner, the PMI must be abandoned when the principal amount reaches just 80 percent.

It can take several years to arrive at the point where the principal is just 80% of the initial loan amount, so it's necessary to know how your California home has appreciated in value. After all, every bit of appreciation you've achieved over time counts towards removing PMI. So what's the reason for paying it after your loan balance has fallen below the 80% mark? Your neighborhood might not adhere to national trends and/or your home could have gained equity before the economy simmered down. So even when nationwide trends forecast declining home values, you should know most importantly that real estate is local.

An accredited, California licensed real estate appraiser can help home owners figure out if their equity has reached the 20% point, as it's a hard thing to know. As appraisers, it's our job to recognize the market dynamics of our area. At Fair Values, we're experts at recognizing value trends in Garden Grove, Orange 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 usually eliminate the PMI with little trouble. At that time, the homeowner can retain the savings from that point on.


	Has your real estate appreciated since you first purchased? Contact Fair Values today at 714.351.1440. You may be able to cancel your Private Mortgage Insurance premium.

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

Fair Values provides FHA and conventional residential real estate appraisals in Los Angeles County, Orange County, San Bernardino County, Riverside County, and San Diego County. Call or email us today!