Let Ostlund Appraisals help you decide if you can eliminate your PMIWhen buying a house, a 20% down payment is usually the standard. Because the liability for the lender is usually only the difference between the home value and the sum outstanding on the loan, the 20% supplies a nice cushion against the charges of foreclosure, reselling the home, and natural value fluctuationsin the event a purchaser is unable to pay. During the recent mortgage boom of the last decade, it was widespread to see lenders requiring down payments of 10, 5 or sometimes 0 percent. How does a lender manage the increased risk of the small down payment? The answer is Private Mortgage Insurance or PMI. This additional policy takes care of the lender in the event a borrower doesn't pay on the loan and the value of the home is lower than the balance of the loan. PMI is pricey to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and oftentimes isn't even tax deductible. Unlike a piggyback loan where the lender takes in all the deficits, PMI is profitable for the lender because they acquire the money, and they receive payment if the borrower is unable to pay. 
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How homebuyers can refrain from paying PMIWith the implementation of The Homeowners Protection Act of 1998, on most loans lenders are forced to automatically eliminate the PMI when the principal balance of the loan equals 78 percent of the primary loan amount. Smart home owners can get off the hook ahead of time. The law designates that, upon request of the homeowner, the PMI must be abandoned when the principal amount reaches only 80 percent. Since it can take many years to reach the point where the principal is just 20% of the original amount borrowed, it's important to know how your home has increased in value. After all, any appreciation you've obtained over time counts towards dismissing PMI. So why pay it after your loan balance has fallen below the 80% mark? Your neighborhood may not be minding the national trends and/or your home could have secured equity before things calmed down, so even when nationwide trends signify declining home values, you should understand that real estate is local. The hardest thing for most homeowners to understand is just when their home's equity goes over the 20% point. A certified, licensed real estate appraiser can certainly help. It's an appraiser's job to keep up with the market dynamics of their area. At Ostlund Appraisals, we're masters at identifying value trends in Brentwood, Contra Costa 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 most often do away with the PMI with little effort. At which time, the home owner can delight in the savings from that point on.
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