Private Mortgage Insurance

A 20% down payment is usually accepted when buying a house. Considering the risk for the lender is generally only the remainder between the home value and the amount remaining on the loan, the 20% provides a nice cushion against the costs of foreclosure, selling the home again, and natural value variations in the event a purchaser defaults.

The amount you keep from dropping the PMI required when you got your mortgage will make up for the cost of the appraisal in no time. Nobody is more qualified than Bolton Appraisal when it comes to appreciating values in the city of Fair Oaks and Sacramento County. Contact us today.

Banks were accepting down payments dropping to 10, 5 and frequently 0 percent during the mortgage boom of the mid 2000s. How does a lender manage the added risk of the small down payment? The solution is Private Mortgage Insurance or PMI. This additional plan guards the lender in the event a borrower is unable to pay on the loan and the value of the home is lower than the balance of the loan.

PMI is pricey to a borrower in that the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and frequently isn’t even tax deductible. As opposed to a piggyback loan where the lender absorbs all the damages, PMI is profitable for the lender because they acquire the money, and they
are covered if the borrower is unable to pay.

How homebuyers can refrain from bearing the cost of PMI

With the passage of The Homeowners Protection Act of 1998, lenders are forced to automatically terminate the PMI when the principal balance of the loan equals 78 percent of the primary loan amount on nearly all loans. Acute home owners can get off the hook a little early. The law promises that, at the request of the home owner, the PMI must be abandoned when the principal amount reaches only 80 percent.

Considering it can take many years to arrive at the point where the principal is just 80% of the initial loan amount, it’s important to know how your C alifornia home has increased in value. After all, all of the appreciation you’ve accomplished over time counts towards abolishing PMI. So why pay it after your loan balance has dropped below the 80% mark? Your neighborhood may not conform to national trends and/or your home might have acquired equity before the economy cooled off. So even when nationwide trends predict decreasing home values, you should understand that real estate is local.

Has your real estate appreciated since you first purchased? Call Bolton Appraisal at (916) 803-8153 . You may be able to save money by removing your Private Mortgage Insurance premium.

A certified, California licensed real estate appraiser can help homeowners figure out just when their home’s equity rises above the 20% point, as it’s a difficult thing to know. Market dynamics and neighborhood-specific pricing trends are an appraiser’s primary job! At Bolton Appraisal, we’re experts at determining value trends in Fair Oaks, Sacramento County, and surrounding areas, and we know when property values have risen or declined. Faced with information from an appraiser, the mortgage company will generally do away with the PMI with little effort. At that time, the homeowner can enjoy the savings from that point on.