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

It's widely understood that a 20% down payment is accepted when purchasing a home. The lender's liability is usually only the remainder between the home value and the amount outstanding on the loan, so the 20% supplies a nice buffer against the expenses of foreclosure, reselling the home, and natural value changes in the event a purchaser is unable to pay.

During the recent mortgage upturn that our country recently experienced, it became customary to see lenders reducing down payments to 10, 5, 3 or even 0 percent. A lender is able to endure the added risk of the low down payment with Private Mortgage Insurance or PMI. PMI guards the lender if a borrower doesn't pay on the loan and the market price of the house is lower than the balance of the loan.

PMI can be costly to a borrower in that the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and many times isn't even tax deductible. Unlike a piggyback loan where the lender consumes all the deficits, PMI is lucrative for the lender because they acquire the money, and they get the money if the borrower doesn't pay.


Does your monthly loan payment have a lineitem for PMI? Call Appraisal Professionals, LLC today at (512) 535-5007 or send us an e-mail. A new appraisal could save you thousands.

How can a home owner avoid bearing the cost of PMI?

The Homeowners Protection Act of 1998 obligates the lenders on the majority of loans to automatically eliminate the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount. Smart home owners can get off the hook sooner than expected. The law pledges that, at the request of the home owner, the PMI must be abandoned when the principal amount reaches just 80 percent.

Considering it can take a significant number of years to get to the point where the principal is only 80% of the original amount borrowed, it's necessary to know how your Texas home has appreciated in value. After all, all of the appreciation you've obtained over time counts towards abolishing PMI. So why should you pay it after the balance of your loan has fallen below the 80% threshold? Your neighborhood might not conform to national trends and/or your home might have gained equity before the economy simmered down. So even when nationwide trends indicate falling home values, you should realize that real estate is local.

The difficult thing for many consumers to determine is just when their home's equity goes over the 20% point. An accredited, Texas licensed real estate appraiser can certainly help. It's an appraiser's job to understand the market dynamics of their area. At Appraisal Professionals, LLC, we're masters at identifying value trends in Austin, Travis County, and surrounding areas, and we know when property values have risen or declined. Faced with figures from an appraiser, the mortgage company will usually cancel the PMI with little effort. At that time, the homeowner can delight in the savings from that point on.


Has your real estate appreciated since you first purchased? Contact Appraisal Professionals, LLC today at (512) 535-5007 to see if you can get rid of your Private Mortgage Insurance payment.

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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