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

It's generally known that a 20% down payment is accepted when buying a house. The lender's only liability is typically just the remainder between the home value and the sum due on the loan, so the 20% adds a nice buffer against the costs of foreclosure, reselling the home, and typical value changes on the chance that a borrower doesn't pay.

During the recent mortgage boom of the mid 2000s, it became customary to see lenders only asking for down payments of 10, 5 or sometimes 0 percent. A lender is able to handle the additional risk of the minimal down payment with Private Mortgage Insurance or PMI. PMI covers the lender in case a borrower is unable to pay on the loan and the value of the home is lower than the balance of 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 is pricey to a borrower. Instead of a piggyback loan where the lender takes in all the losses, PMI is beneficial for the lender because they secure the money, and they are covered if the borrower defaults.


Did you secure your mortgage with less than 20% down? Contact Appraisal Professionals, LLC today at (512) 535-5007. You may be able to get rid of your Private Mortgage Insurance payment.

How can homeowners refrain from bearing the expense of PMI?

With the passage of The Homeowners Protection Act of 1998, lenders are obligated to automatically cancel the PMI when the principal balance of the loan reaches 78 percent of the initial loan amount on most loans. The law guarantees that, at the request of the home owner, the PMI must be released when the principal amount reaches just 80 percent. So, keen home owners can get off the hook a little earlier.

Considering it can take a significant number of years to reach the point where the principal is just 80% of the initial amount of the loan, it's essential to know how your Texas home has grown in value. After all, all of the appreciation you've accomplished over time counts towards abolishing PMI. So what's the reason for paying it after your loan balance has fallen below the 80% threshold? Your neighborhood may not conform to national trends and/or your home could have secured equity before the economy cooled off. So even when nationwide trends hint at a reduction in home values, you should realize that real estate is local.

The toughest thing for many people to determine is just when their home's equity rises above the 20% point. A certified, Texas licensed real estate appraiser can definitely help. Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job! At Appraisal Professionals, LLC, we're masters at recognizing value trends in Austin, Travis County, and surrounding areas, and we know when property values have risen or declined. When faced with information from an appraiser, the mortgage company will generally do away with the PMI with little anxiety. At that time, the home owner can retain the savings from that point on.


The amount you keep from dropping the PMI required when you got your mortgage pays for the appraisal in no time. Nobody is more qualified than Appraisal Professionals, LLC when it comes to appreciating values 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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