Let Appraisal Professionals, LLC help you learn if you can get rid of your PMI

A 20% down payment is typically accepted when purchasing a home. Because the liability for the lender is oftentimes only the remainder between the home value and the sum remaining on the loan, the 20% provides a nice buffer against the charges of foreclosure, selling the home again, and natural value changes in the event a borrower defaults.

The market was taking down payments dropping to 10, 5 and frequently 0 percent in the peak of last decade's mortgage boom. How does a lender manage the increased risk of the low down payment? The answer is Private Mortgage Insurance or PMI. This supplementary plan protects the lender if a borrower doesn't pay on the loan and the value of the property is lower than what is owed on the loan.

Since the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and many times isn't even tax deductible, PMI can be expensive to a borrower. Unlike a piggyback loan where the lender takes in all the costs, PMI is money-making for the lender because they collect the money, and they are covered if the borrower doesn't pay.


Is PMI included in your monthly mortgage payment? Call Appraisal Professionals, LLC today at (512) 535-5007 or send us an e-mail. Documentation of your home's current value could save you thousands.

How can homeowners refrain from bearing the cost of PMI?

The Homeowners Protection Act of 1998 obligates the lenders on the majority of loans to automatically cease the PMI when the principal balance of the loan equals 78 percent of the primary loan amount. The law designates that, at the request of the home owner, the PMI must be abandoned when the principal amount reaches just 80 percent. So, wise home owners can get off the hook a little early.

It can take a significant number of years to get to the point where the principal is only 80% of the initial loan amount, so it's important to know how your Texas home has grown in value. After all, any appreciation you've achieved over time counts towards removing PMI. So what's the reason for paying it after the balance of your loan has fallen below the 80% threshold? Even when nationwide trends hint at decreasing home values, understand that real estate is local. Your neighborhood may not be adhering to the national trends and/or your home could have acquired equity before things declined.

A certified, Texas licensed real estate appraiser can help homeowners figure out if their equity has exceeed the 20% point, as it's a difficult thing to know. Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job! At Appraisal Professionals, LLC, we're masters at pinpointing value trends in Austin, Travis County, and surrounding areas, and we know when property values have risen or declined. Faced with data from an appraiser, the mortgage company will generally remove the PMI with little effort. At which time, the homeowner can delight in the savings from that point on.


The amount you keep from dropping your PMI will make up for the price of the appraisal in a matter of months. Appraisal Professionals, LLC has years of experience with value trends in Austin and Travis County. Contact us today.

Want to learn more about PMI and the Homeowners Protection Act? Click this link:

Cancellation of Private Mortgage Insurance: Federal Law May Save You Hundreds of Dollars Each Year

 


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