PEGASUS APPRAISALS can help you remove your Private Mortgage InsuranceWhen getting a mortgage, a 20% down payment is typically the standard. The lender's liability is oftentimes only the difference between the home value and the sum outstanding on the loan, so the 20% provides a nice buffer against the costs of foreclosure, selling the home again, and typical value changes on the chance that a purchaser defaults. Banks were accepting down payments as low as 10, 5 and even 0 percent during the mortgage boom of the last decade. How does a lender handle the additional risk of the small down payment? The answer is Private Mortgage Insurance or PMI. This supplementary policy takes care of the lender in case 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 expensive to a borrower because the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and frequently isn't even tax deductible. It's profitable for the lender because they acquire the money, and they get the money if the borrower doesn't pay, unlike 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 homeowners can prevent paying PMIWith the implementation of The Homeowners Protection Act of 1998, on most loans lenders are obligated to automatically terminate the PMI when the principal balance of the loan reaches 78 percent of the primary loan amount. Wise homeowners can get off the hook a little early. The law designates that, at the request of the homeowner, the PMI must be dropped when the principal amount reaches only 80 percent. It can take many years to reach the point where the principal is just 20% of the original amount borrowed, so it's important to know how your home has grown in value. After all, every bit of appreciation you've gained over time counts towards dismissing PMI. So why should you pay it after your loan balance has dropped below the 80% mark? Despite the fact that nationwide trends forecast plummeting home values, be aware that real estate is local. Your neighborhood may not be minding the national trends and/or your home may have gained equity before things simmered down. The toughest thing for most home owners to know is just when their home's equity rises above the 20% point. An accredited, licensed real estate appraiser can certainly help. It is an appraiser's job to keep up with the market dynamics of their area. At PEGASUS APPRAISALS, we're experts at analyzing value trends in Lake Elsinore, 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 usually eliminate the PMI with little effort. At that time, the home owner can relish the savings from that point on.
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