Let Eagle Appraisal Services help you learn if you can cancel your PMI
08/07/2018; Home values have been increasing for the past several years however economists and market data all point to a slow down, stabilization, and eventual correction in values. Reduce your monthly payment now by getting rid of your PMI before your home value declines!
Who Has PMI and Why?
A 20% down payment is typically the standard when getting a mortgage.
Since the risk for the lender is usually only the remainder between the home value and the amount remaining on the loan, the 20% adds a nice cushion against the expenses of foreclosure, reselling the home, and natural value changes in the event a purchaser defaults.
Sometimes buyers don't have the 20% to put down, yet still qualify for a loan based on income, job stability, and incentives. When this happens the lenders manage the added risk of the low down payment by charging the borrower Private Mortgage Insurance (PMI). PMI is insurance that guards the lender in case a borrower is unable to pay on the loan and the value of the property is lower than what is owed on the loan.
How can I stop paying PMI?The Homeowners Protection Act of 1998 requires the lenders on the majority of loans to automatically cancel the PMI when the principal balance of the loan reaches 78% of the original loan amount. Keen homeowners can get off the hook ahead of time. The law stipulates that, upon request of the home owner, the PMI must be dropped when the principal amount equals only 80%!
It typically takes years to reach the point where the principal is just 80% of the original amount borrowed, however your California home has appreciated in value, and the appreciation counts towards removing PMI. So what's the reason for paying it after your loan balance has fallen below the 80% mark?
A certified, California licensed real estate appraiser can help homeowners figure out if their equity has exceeed the 20% point, as it's a hard thing to know. As appraisers, it's our job to keep up with the market dynamics of our area. At Eagle Appraisal Services, we're masters at pinpointing value trends in Loomis, Placer County, and surrounding areas, and we know when property values have risen or declined. Faced with information from an appraiser, the mortgage company will usually eliminate the PMI with little effort. At which time, the home owner can relish the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: