Charles Keim's Appraisal Services can help you remove your Private Mortgage InsuranceA 20% down payment is typically accepted when purchasing a home. Because the liability for the lender is often only the remainder between the home value and the amount due on the loan, the 20% provides a nice cushion against the expenses of foreclosure, reselling the home, and typical value variationsin the event a purchaser is unable to pay. During the recent mortgage upturn of the mid 2000s, it was customary to see lenders requiring down payments of 10, 5 or sometimes 0 percent. How does a lender manage the additional risk of the small down payment? The answer is Private Mortgage Insurance or PMI. This supplemental plan protects the lender in the event a borrower is unable to pay on the loan and the market price of the house is lower than what the borrower still owes on the loan. PMI can be expensive to a borrower because the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and generally 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 obtain 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 can buyers avoid paying PMI?With the implementation of The Homeowners Protection Act of 1998, on most loans lenders are obligated to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the primary loan amount. The law designates that, at the request of the home owner, the PMI must be dropped when the principal amount equals only 80 percent. So, keen home owners can get off the hook ahead of time. Because it can take many years to arrive at the point where the principal is only 20% of the original amount of the loan, it's crucial to know how your home has increased in value. After all, every bit of appreciation you've gained over the years counts towards abolishing PMI. So what's the reason for paying it after the balance of your loan has fallen below the 80% threshold? Despite the fact that nationwide trends hint at plummeting home values, be aware that real estate is local. Your neighborhood might not be following the national trends and/or your home could have gained equity before things calmed down. The difficult thing for most home owners to understand is just when their home's equity rises above the 20% point. An accredited, licensed real estate appraiser can surely help. As appraisers, it's our job to keep up with the market dynamics of our area. At Charles Keim's Appraisal Services, we're masters at pinpointing value trends in Menifee, Riverside County and surrounding areas, and we know when property values have risen or declined. Faced with figures from an appraiser, the mortgage company will generally do away with the PMI with little effort. At that time, the homeowner can relish the savings from that point on.
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