Let Laura Conte help you learn if you can get rid of your PMIWhen getting a mortgage, a 20% down payment is typically the standard. Because the liability for the lender is often only the remainder between the home value and the sum outstanding on the loan, the 20% supplies a nice cushion against the costs of foreclosure, selling the home again, and typical value variationson the chance that a purchaser doesn't pay. During the recent mortgage boom of the mid 2000s, it was widespread to see lenders commanding down payments of 10, 5 or sometimes 0 percent. A lender is able to handle the added risk of the small down payment with Private Mortgage Insurance or PMI. PMI protects the lender in case a borrower defaults on the loan and the market price of the property is less than what the borrower still owes on the loan. Because the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and many times isn't even tax deductible, PMI is pricey to a borrower. It's money-making for the lender because they secure the money, and they receive payment if the borrower is unable to pay, different from a piggyback loan where the lender takes in all the costs. 
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 PMIWith the implementation of The Homeowners Protection Act of 1998, on nearly all loans lenders are obligated to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount. The law states that, at the request of the home owner, the PMI must be released when the principal amount equals just 80 percent. So, keen home owners can get off the hook a little earlier. Since it can take countless years to get to the point where the principal is only 20% of the original loan amount, it's important to know how your home has increased in value. After all, any appreciation you've gained over the years counts towards abolishing PMI. So why should you pay it after your loan balance has dropped below the 80% threshold? Even when nationwide trends predict decreasing home values, understand that real estate is local. Your neighborhood may not be adopting the national trends and/or your home may have gained equity before things simmered down. The difficult thing for many home owners to understand is just when their home's equity goes over the 20% point. An accredited, licensed real estate appraiser can certainly help. As appraisers, it's our job to understand the market dynamics of our area. At Laura Conte, we're masters at recognizing value trends in Salinas, Monterey County and surrounding areas, and we know when property values have risen or declined. Faced with data from an appraiser, the mortgage company will often drop the PMI with little trouble. At that time, the home owner can relish the savings from that point on.
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