How to remove the monthly Mortgage Insurance payment, aka MI or PMI, from your home loan...

With Sacramento home values on the rise, several past clients have gotten in touch with me recently wanting to know three things: (a) how much is their home worth, (b) is it worth enough to remove my mortgage insurance, and (c) what is the process to do that?

First for those who don't already know, I should explain what Mortgage Insurance is. Mortgage Insurance, aka MI or PMI, is insurance that borrowers must pay for and is typically required for conventional mortgage loans when down payments or equity is below 20%, and ALL FHA loans. This insurance compensates lenders or "investors" for losses due to the default of a mortgage loan. The cost of mortgage insurance varies based on the amount of the initial downpayment for the loan, and how large the loan itself is.

So for example, if a buyer purchased a home with a conventional loan for $175,000, and made a 5% ($8,750) downpayment, the total loan would be approximately $166,250. At a 5% interest rate, the total monthly mortgage payment including loan principle, interest, property taxes, homeowner's insurance, and mortgage insurance would be approximately $1,235. About $109 of this payment would be mortgage insurance. Alternatively, if a buyer purchased a home for $400,000 and made a 10% ($40,000) downpayment, the total loan would be approximately $360,000. At a 5% interest rate, the total monthly mortgage payment would be approximately $2,625, and about $159/month would be mortgage insurance.

Wouldn't it be nice to erase that mortgage insurance portion of the payment and save some money? Here are the requirements for requesting cancellation of your mortgage insurance on your primary residence:

• You must not have any "subordinate" loans. Basically you can not have a Home Equity Line of Credit (HELOC), 2nd mortgage, etc.
• You must have a good payment history -- don't make late payments!
• You must have been making payments on the loan for at least 2 years. Sorry...if you bought your house last year you have to wait...
• Your loan balance is either 80% of your original sales price, or you can demonstrate that your home has increased in value so that you have 20% equity.

So basically -- If you bought your Sacramento home for $175,000 2+ years ago, and you currently owe about $161,000 (based on my scenario above, the original financed amount of $166,250 would have been paid down to that amount), you must be able to demonstrate that your home is worth more than $200,000. The lender will determine the value either by an AVM -- a Zillow-like automated valuation tool, or you can do a full appraisal. You must provide a written request for cancelling your mortgage insurance. Call your loan servicing company and ask them where to send this request. Some will allow you to do this by fax and others will require it to be mailed.

Given the current upward thrust of the Sacramento real estate market, many folks who financed a Sacramento area home 2 years ago will be able to make a strong case to their loan servicer that this monthly mortgage insurance be cancelled.

If I can provide you with an estimate of your home's value to help you determine this, please send me an email to erin@dunniganrealtors.com and I am happy to provide you the data and a letter template to make your request to the loan servicer. If you have read my blog posts about tools like Zillow, you will know that I believe they are completely inaccurate (and for Sacramento homes, mainly just too low right now!).

Unfortunately, if you purchased with an FHA loan, you have a much longer wait (anywhere from 5 years, to when you pay off your loan, depending on when you made your purchase) to remove your mortgage insurance. Depending on your circumstances, if you have adequate equity and a good payment history -- it might just make sense to refinance your loan. One of my past FHA buyer clients is refinancing, transitioning from a 30-year FHA loan to a 15-year Conventional loan. He is lowering his interest rate, and getting rid of the MI, and his monthly payment is staying about the same! So basically he will own his home in half the time. Amazing...

2013 Curtis Park Summer Concert Series is starting this month!

The first show for the 2013 Curtis Park Summer Concert Series is coming up! This year they will be held on the last Sunday of June (the 30th), July (the 28th) and August (the 25th). Music in the Park is a free and takes place in the evenings at the north end of Curtis Park -- think where 26th Street dead-ends into the park. I love this series. It is so relaxing! I usually bring a picnic, blanket, and some canvas chairs.

How far off the mark is Zillow for Sacramento home values? Part II...

I posted a couple months ago about Zillow values and how far off they had been for my last few transactions...I thought I would follow-up that post with some new information since that post was basically concerning Sacramento area home sales from the end of February. Perhaps Zillow had the opportunity in the last few months to update their mathematical algorithms and get to a more accurate price? Let's see...

In my last post I referenced my four most recent closed sales, so I will do the same here from my transactions closed in about the last month (and by the way I am writing this post as of June 13, 2013 -- so that is the date and basis for the Zillow information)...

8046 Otium Way, Antelope, CA 95843; this was a home I listed in Antelope. The original listing price was $209,000, and this sold on 5/9/13 for $225,000 -- 7.19% above it's listing price. Zillow's Zestimate: $197,503 -- approximately 13.92% below it's selling price.

5836 20th Avenue, Sacramento, CA 95820; this was a home I listed in Sacramento close to the Tahoe Park neighborhood. The original listing price was $159,900, and this sold on 5/16/13 for $168,000 -- 5.06% above it's listing price. Zillow's Zestimate: $154,695 -- approximately 8.60% below it's selling price.

4335 54th Avenue, Sacramento, CA 95820; this was a home I listed near Colonial Heights, a neighborhood just to the south of Tahoe Park. The original listing price was $239,000, and this sold on 5/31/13 for $236,000 -- 1.26% below the listing price, and only because we had a craptastically low appraisal to deal with (appraisal was $235,000 on a $245,000 contract). Zillow's Zestimate: $143,631 -- approximately 39.14% below it's selling price. WOW.

1900 46th Street, Sacramento, CA 95819; this was a home East Sacramento in the Elmhurst neighborhood near UC Davis Medical Center, and I represented the buyer. The original listing price was $350,000, and this sold on 6/10/13 for $356,000 -- 1.17% above it's listing price. Zillow's Zestimate: $310,701 -- approximately 14.53% below it's selling price.

So based on this, I can conclude that Sacramento Zillow values are still way off...I'll check again in a few months and post again.

Sacramento County Median Home Price Statistics for May 2013

WOW sums it up. The numbers are out. The median home sale price was $240,000 for May 2013 in Sacramento County. This is starkly different from just a year ago as you can probably tell from the graphic here. In May, my personal closed transactions were on par with this trend -- selling for substantially higher prices than what these homes would have fetched last year in 2012. Compared to the home values in Sacramento County in August 2005 (the peak of the market) at $395,000, our current values are still a great bargain, and in general home affordability is really high among median wage earners in Sacramento. Is this level of appreciation sustainable? NO. But this has allowed many home sellers who were in short sale territory just a year ago to get out from under their homes and sell with equity! Interest rates remain low, but are creeping upward. Given that we are entering a time of year when typically most folks seek to buy or sell homes, the next couple months should be interesting.

It's time for A Taste of Land Park!

It's time for A Taste of Land Park again! I can't believe this is the 12th annual event...I must be getting old! the 2013 event will be on Sunday, June 9th, from 4pm - 7pm. There is a VIP hour from 3pm - 4pm for members of the Land Park Community Association. This year's event will be located on 14th Street between Vallejo Way and Markham Way.


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As usual, there will be several local restaurants, breweries, wineries, and more serving great food and drink! There will be a "Wall of Wine", local craft vendors, and live music as well!

Pre-sale tickets are $30 each and available for purchase online, ($35 at the door) or you can buy them in-person at Vic’s Ice Cream, Espresso Metro, Parkside Pharmacy and Riverside Clubhouse.

New Listing - 3086 37th Street, Sacramento, CA 95817

Stunning 4 bedroom, 3 bathroom, 1,534sf home, built in 2010 with old world charm through out. You will love the granite kitchen, stainless appliances, upgraded cabinets, and tile flooring. Basement for storage, dual zone air conditioning system, tankless water heater. Guest bedroom downstairs with full bath. Near UC Davis Med Center, McGeorge Law School, revitalized business district, shopping. Backs to McClatchy Park. Don't wait!! Offered at $199,900. For more photos and detail, please visit 3086 37th Street, Sacramento, CA 95817.

Featured on the Sacramento KCRA 3 News about marketing home listings for sale with really great photos...

If you follow me on Facebook or Twitter, or if you watch the KCRA 3 news, you may already know that one of my listings, my seller client, my go-to photographer, and I were profiled in a news story about marketing Sacramento homes for sale.

As a part of my listing services I hire Brian Kellogg, a professional photographer, to take pictures of my listings. Good photos are extremely important in the overall marketing of a home for sale. Proper lighting, good composition, wide angles and high-quality equipment, etc. create really compelling good photos. While I did take a photography course in high school, my photos just don't turn out like a professional's do...and I know that most buyers are looking for homes online -- ideally a buyer will fall in love with my home listing when the view photos online, before they ever see the home in person.

Also, in addition to posting excellent photos, it is important to post A LOT of excellent photos. MLS will allow up to 25 photos, and depending on the size and features of the home, I try to upload as many as possible that highlight all of the great things about the property. Lack of photos will cause most buyers to wonder just what is not being shown, and to think "what's wrong with this house?" We don't want that -- a buyer may not even want to come and look at a house under those circumstances, and may direct their attention to another house...for maximum marketing exposure and as many showings as possible, and (most importantly) the highest sales price to the seller -- lots of excellent photos are critically important.

To view the KCRA news story, click here.

New Listing - 529 Lilac Lane, Rio Linda, CA

Rio Linda Fixer - a 3 bedroom, 2 bathroom, 1,336sf blank canvas awaits your personal touch. Here is your chance to have a little bit of country that still close to everything you need! Open layout and a large backyard. Say hi to the cow across the street! Offered at $155,000, subject to lender approval of short sale. For more detail, please visit 529 Lilac Lane, Rio Linda, CA.