Let Childress and Associates help you decide if you can eliminate your PMIA 20% down payment is usually the standard when buying a house. The lender's risk is often only the difference between the home value and the sum outstanding on the loan, so the 20% supplies a nice buffer against the expenses of foreclosure, selling the home again, and regular value fluctuations on the chance that a borrower is unable to pay. The market was accepting down payments as low as 10, 5 and often 0 percent in the peak of last decade's mortgage boom. How does a lender handle the increased risk of the small down payment? The solution is Private Mortgage Insurance or PMI. PMI covers the lender in case a borrower doesn't pay on the loan and the value of the house is lower than what the borrower still owes on the loan. PMI can be costly to a borrower because the $40-$50 a month per $100,000 borrowed is lumped into the mortgage monthly payment and many times isn't even tax deductible. Opposite from a piggyback loan where the lender takes in all the costs, PMI is beneficial for the lender because they collect 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 homebuyers can avoid bearing the expense of PMIThe Homeowners Protection Act of 1998 makes the lenders on most loans to automatically cease the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount. The law guarantees that, at the request of the homeowner, the PMI must be dropped when the principal amount equals only 80 percent. So, acute homeowners can get off the hook ahead of time. Because it can take countless years to arrive at the point where the principal is just 20% of the original amount of the loan, it's crucial to know how your home has appreciated in value. After all, every bit of appreciation you've gained over the years counts towards abolishing PMI. So why should you pay it after the balance of your loan has fallen below the 80% threshold? Your neighborhood might not be minding the national trends and/or your home might have gained equity before things settled down, so even when nationwide trends hint at declining home values, you should understand that real estate is local. The hardest thing for almost all home owners to know is just when their home's equity rises above the 20% point. An accredited, licensed real estate appraiser can definitely help. As appraisers, it's our job to keep up with the market dynamics of our area. At Childress and Associates, we know when property values have risen or declined. We're experts at analyzing value trends in Glendale, Kern County and surrounding areas. Faced with figures from an appraiser, the mortgage company will often drop the PMI with little effort. At that time, the home owner can retain the savings from that point on.
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