Price Appraisals & Realty, LLC can help you remove your Private Mortgage Insurance
It's widely inferred that a 20% down payment is the standard when getting a mortgage. The lender's risk is generally only the remainder between the home value and the amount remaining on the loan, so the 20% adds a nice buffer against the charges of foreclosure, selling the home again, and natural value fluctuations in the event a borrower doesn't pay.
During the recent mortgage upturn of the last decade, it was common to see lenders taking down payments of 10, 5 or sometimes 0 percent. A lender is able to endure the added risk of the small down payment with Private Mortgage Insurance or PMI. This added plan guards the lender in the event a borrower is unable to pay on the loan and the worth of the house is lower than the balance of the loan.
Because the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and frequently isn't even tax deductible, PMI can be pricey to a borrower. Separate from a piggyback loan where the lender takes in all the deficits, PMI is advantageous for the lender because they secure the money, and they get the money if the borrower defaults.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How can homeowners prevent paying PMI?
The Homeowners Protection Act of 1998 obligates the lenders on nearly all loans to automatically eliminate the PMI when the principal balance of the loan reaches 78 percent of the original loan amount. Keen homeowners can get off the hook sooner than expected. The law promises that, at the request of the homeowner, the PMI must be dropped when the principal amount equals only 80 percent.
It can take many years to reach the point where the principal is only 20% of the original amount of the loan, so it's essential to know how your home has grown in value. After all, all of the appreciation you've obtained over the years counts towards abolishing PMI. So what's the reason for paying it after the balance of your loan has fallen below the 80% threshold? Despite the fact that nationwide trends indicate declining home values, realize that real estate is local. Your neighborhood might not be minding the national trends and/or your home might have gained equity before things calmed down.
The toughest thing for almost all home owners to know is just when their home's equity goes over the 20% point. An accredited, licensed real estate appraiser can surely help. As appraisers, it's our job to understand the market dynamics of our area. At Price Appraisals & Realty, LLC, we know when property values have risen or declined. We're masters at pinpointing value trends in Lakeway, Travis County and surrounding areas. Faced with information from an appraiser, the mortgage company will most often cancel the PMI with little effort. At which time, the home owner can enjoy the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: