Have equity in your home? Want a lower payment? An appraisal from West Valley College can help you get rid of your PMI.It's typically understood that a 20% down payment is common when buying a house. Since the liability for the lender is usually only the remainder between the home value and the amount due on the loan, the 20% provides a nice cushion against the charges of foreclosure, reselling the home, and typical value changeson the chance that a borrower is unable to pay. The market was taking down payments down to 10, 5 and even 0 percent during the mortgage boom of the mid 2000s. How does a lender handle the added risk of the small down payment? The answer is Private Mortgage Insurance or PMI. This supplemental policy protects the lender in case a borrower defaults on the loan and the worth of the house is less than what the borrower still owes on the loan. PMI can be pricey to a borrower because the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and often isn't even tax deductible. It's favorable for the lender because they collect the money, and they receive payment if the borrower is unable to pay, opposite from a piggyback loan where the lender consumes all the costs. 
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How can home owners keep from bearing the cost of PMI?The Homeowners Protection Act of 1998 forces the lenders on most loans to automatically stop the PMI when the principal balance of the loan equals 78 percent of the primary loan amount. Smart home owners can get off the hook ahead of time. The law pledges that, upon request of the homeowner, the PMI must be abandoned when the principal amount equals only 80 percent. It can take many years to arrive at the point where the principal is just 20% of the initial amount of the loan, so it's important to know how your home has grown in value. After all, any 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% mark? Your neighborhood may not be following the national trends and/or your home might have secured equity before things simmered down, so even when nationwide trends forecast falling home values, you should understand that real estate is local. An accredited, licensed real estate appraiser can help homeowners understand just when their home's equity goes over the 20% point, as it's a tough thing to know. As appraisers, it's our job to understand the market dynamics of our area. At West Valley College, we're experts at pinpointing value trends in Saratoga, Santa Clara County and surrounding areas, and we know when property values have risen or declined. Faced with data from an appraiser, the mortgage company will generally drop the PMI with little trouble. At that time, the home owner can retain the savings from that point on.
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