John F. Schulke can help you remove your Private Mortgage InsuranceA 20% down payment is usually accepted when buying a house. The lender's risk is oftentimes only the difference between the home value and the amount due on the loan, so the 20% adds a nice buffer against the expenses of foreclosure, reselling the home, and regular value changes in the event a purchaser is unable to pay. Lenders were working with down payments down to 10, 5 and even 0 percent in the peak of last decade's mortgage boom. A lender is able to handle the added risk of the minimal down payment with Private Mortgage Insurance or PMI. PMI takes care of the lender if a borrower defaults on the loan and the value of the property is lower than the loan balance. PMI can be costly to a borrower because the $40-$50 a month per $100,000 borrowed is lumped into the mortgage monthly payment and often isn't even tax deductible. It's advantageous for the lender because they acquire the money, and they get the money if the borrower defaults, different from a piggyback loan where the lender absorbs all the damages. 
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How can home owners avoid paying PMI?The Homeowners Protection Act of 1998 obligates the lenders on most loans to automatically stop the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount. The law promises that, at the request of the homeowner, the PMI must be released when the principal amount reaches just 80 percent. So, wise homeowners can get off the hook ahead of time. 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 increased in value. After all, any appreciation you've achieved over the years counts towards removing PMI. So what's the reason for paying it after your loan balance has fallen below the 80% threshold? Your neighborhood may not be heeding the national trends and/or your home may have acquired equity before things simmered down, so even when nationwide trends forecast decreasing 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. It is an appraiser's job to know the market dynamics of their area. At John F. Schulke, we know when property values have risen or declined. We're masters at recognizing value trends in Los Altos, Santa Clara County and surrounding areas. When faced with figures from an appraiser, the mortgage company will usually remove the PMI with little anxiety. At which time, the home owner can retain the savings from that point on.
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