Let McHugh Appraisal Service help you discover if you can get rid of your PMI

It's widely inferred that a 20% down payment is accepted when buying a house. Since the risk for the lender is often only the difference between the home value and the sum remaining on the loan, the 20% adds a nice buffer against the costs of foreclosure, reselling the home, and regular value variations in the event a purchaser is unable to pay.

During the recent mortgage upturn of the mid 2000s, it was widespread to see lenders making deals with down payments of 10, 5 or often 0 percent. How does a lender endure the added risk of the low down payment? The solution is Private Mortgage Insurance or PMI. This supplemental plan guards the lender if a borrower doesn't pay on the loan and the market price of the home is lower than what is owed on the loan.

PMI can be pricey to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage monthly payment and often isn't even tax deductible. Separate from a piggyback loan where the lender absorbs all the losses, PMI is beneficial for the lender because they obtain the money, and they are covered if the borrower is unable to pay.


	Has your home value appreciated since you first purchased? Contact McHugh Appraisal Service today at 650-568-6121 to see if you can save money by removing your Private Mortgage Insurance premium.

How can a home buyer keep from paying PMI?

As a result of The Homeowners Protection Act of 1998, lenders are obligated to automatically cease the PMI when the principal balance of the loan equals 78 percent of the primary loan amount on nearly all loans. The law promises that, upon request of the home owner, the PMI must be abandoned when the principal amount reaches only 80 percent. So, wise home owners can get off the hook ahead of time.

It can take a significant number of years to reach the point where the principal is only 80% of the initial amount borrowed, so it's necessary to know how your California home has grown in value. After all, every bit of appreciation you've accomplished over time counts towards dismissing PMI. So what's the reason for paying it after your loan balance has fallen below the 80% threshold? Even when nationwide trends predict lower overall home values, realize that real estate is local. Your neighborhood might not be reflecting the national trends and/or your home could have secured equity before things simmered down.

The difficult thing for many people to determine is just when their home's equity rises above the 20% point. An accredited, California licensed real estate appraiser can certainly help. It's an appraiser's job to keep up with the market dynamics of their area. At McHugh Appraisal Service, we're masters at recognizing value trends in Redwood City, San Mateo County, and surrounding areas, and we know when property values have risen or declined. Faced with figures from an appraiser, the mortgage company will most often cancel the PMI with little effort. At which time, the home owner can delight in the savings from that point on.


	Is PMI something increasing your monthly mortgage payment? Call McHugh Appraisal Service today at 650-568-6121 or send us an e-mail. A current appraisal could save you thousands.

Want to learn more about PMI and the Homeowners Protection Act? Click this link:

Cancellation of Private Mortgage Insurance: Federal Law May Save You Hundreds of Dollars Each Year