Lenders typically like to have an insurance policy attached to each mortgage. Not only do they make an income from the annualized interest rate, but they can protect their capital investment by compelling a home owner to purchase PMI or Private Mortgage Insurance.
PMI insurance secures the lender’s chief asset–the real estate itself. If for instance, the homeowner should default on their mortgage loan, the typical risk incurred by the lender is very minimal. The risk is normally just the difference between the appraised value of the property and the what the principal balance on the loan happens to be– minus of course, all foreclosure costs and the cost of selling the property. This protection benefits the lender, but offers nothing by way of compensation to the homeowner.
PMI removal is allowed by the lender when a loan has significantly matured along with a sufficient amount of equity, fulfilling a lender’s requirement. The home owner is the one who requests the property appraisal of the home, and then sends the appraisal to the lender in order to evaluate. PMI removal can decrease the monthly loan payment by a significant percentage, ten percent or more.
Until about 15 years ago, lenders were not required, by law, to inform homeowners of the status of their PMI removal, when they would actually be allowed to get rid of PMI. The Homeowners Protection Act (HPA) was enacted in 1999 which favors the homeowner in these cases. In some circumstances, this law also requires that a mortgage lender will terminate the PMI when the principal loan balance reaches nearty eighty percent of the original amount.
A good Sacramento real estate appraiser will provide a thorough and comprehensive analysis and report for each appraisal undertaking. This will include excellent customer service, a good follow through for any questions that might arise about the process, time frame, etc– all provided with a professional respect and courtesy.
From the very beginning of contact, to the process of setting up the inspection, field work, and final estimate of value, you’ll find us at Sacramento Valley Appraisal to be responsive to your needs and requests, providing a user friendly appraisal report in a timely manner. Please feel free to call our office if you have questions or would like to have your Private Mortgage Insurance eliminated. We would be glad to answer any questions your might have, and walk you through the steps in getting your home appraised for PMI removal.
Please call Sacramento Valley Appraisal: (916) 407 – 5540