Price Appraisals & Realty, LLC can help you remove your Private Mortgage Insurance
A 20% down payment is typically accepted when purchasing a home. Considering the risk for the lender is often only the remainder between the home value and the amount outstanding on the loan, the 20% supplies a nice buffer against the expenses of foreclosure, reselling the home, and regular value changesin the event a purchaser defaults.
The market was taking down payments as low as 10, 5 and often 0 percent in the peak of last decade's mortgage boom. How does a lender endure the increased risk of the small down payment? The solution is Private Mortgage Insurance or PMI. This additional plan covers the lender if a borrower defaults on the loan and the worth of the home is less than the balance of the loan.
Because the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and often isn't even tax deductible, PMI is pricey to a borrower. Separate from a piggyback loan where the lender consumes all the losses, PMI is profitable for the lender because they secure the money, and they get the money if the borrower is unable to pay.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How can a homebuyer keep from bearing the cost of PMI?
The Homeowners Protection Act of 1998 obligates the lenders on nearly all loans to automatically cease the PMI when the principal balance of the loan equals 78 percent of the primary loan amount. The law promises that, upon request of the homeowner, the PMI must be abandoned when the principal amount reaches just 80 percent. So, wise homeowners can get off the hook ahead of time.
Because it can take countless years to arrive at the point where the principal is just 20% of the initial loan amount, it's crucial to know how your home has grown in value. After all, every bit of appreciation you've achieved over time counts towards removing PMI. So why pay it after your loan balance has dropped below the 80% mark? Your neighborhood may not be following the national trends and/or your home could have secured equity before things calmed down, so even when nationwide trends indicate decreasing home values, you should realize that real estate is local.
An accredited, licensed real estate appraiser can help home owners understand just when their home's equity goes over the 20% point, as it's a hard thing to know. It's an appraiser's job to understand the market dynamics of their area. At Price Appraisals & Realty, LLC, we know when property values have risen or declined. We're experts at recognizing value trends in Lakeway, Travis County and surrounding areas. Faced with figures from an appraiser, the mortgage company will usually do away with the PMI with little anxiety. At which time, the home owner can delight in the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: