Mike Chaves Appraisals can help you remove your Private Mortgage InsuranceA 20% down payment is typically the standard when buying a house. The lender's risk is often only the remainder between the home value and the sum due on the loan, so the 20% provides a nice buffer against the costs of foreclosure, selling the home again, and regular value variations in the event a purchaser defaults. The market was working with down payments down to 10, 5 and even 0 percent during the mortgage boom of the last decade. How does a lender manage the additional risk of the small down payment? The answer is Private Mortgage Insurance or PMI. PMI protects the lender if a borrower is unable to pay on the loan and the market price of the house is less than the balance of the loan. PMI is costly to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and many times isn't even tax deductible. It's money-making for the lender because they obtain the money, and they receive payment if the borrower doesn't pay, opposite from a piggyback loan where the lender takes in all the losses. 
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How can a homeowner refrain from bearing the cost of PMI?The Homeowners Protection Act of 1998 makes the lenders on most loans to automatically cancel the PMI when the principal balance of the loan reaches 78 percent of the original loan amount. Wise home owners can get off the hook beforehand. The law stipulates that, upon request of the home owner, the PMI must be dropped when the principal amount reaches just 80 percent. Since it can take many years to get to the point where the principal is just 20% of the original loan amount, it's necessary to know how your home has increased in value. After all, every bit of appreciation you've acquired over time counts towards abolishing PMI. So what's the reason for paying it after the balance of your loan has fallen below the 80% threshold? Even when nationwide trends hint at decreasing home values, understand that real estate is local. Your neighborhood might not be adhering to the national trends and/or your home could have secured equity before things cooled off. The hardest thing for most home owners to understand is just when their home's equity goes over the 20% point. An accredited, licensed real estate appraiser can surely help. It's an appraiser's job to understand the market dynamics of their area. At Mike Chaves Appraisals, we're masters at pinpointing value trends in Mission Viejo, Orange County and surrounding areas, and we know when property values have risen or declined. Faced with information from an appraiser, the mortgage company will most often do away with the PMI with little effort. At that time, the homeowner can enjoy the savings from that point on.
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