Appraisal Professionals, LLC can help you remove your Private Mortgage Insurance

A 20% down payment is usually the standard when purchasing a home. The lender's risk is oftentimes only the remainder between the home value and the balance due on the loan, so the 20% supplies a nice cushion against the expenses of foreclosure, reselling the home, and typical value fluctuations in the event a borrower defaults.

Lenders were accepting down payments discounted to 10, 5 and frequently 0 percent during the mortgage boom of the last decade. A lender is able to endure the increased risk of the small down payment with Private Mortgage Insurance or PMI. PMI protects the lender in case a borrower doesn't pay on the loan and the market price of the property is less than what the borrower still owes on the loan.

PMI can be expensive to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and oftentimes isn't even tax deductible. It's favorable for the lender because they secure the money, and they get the money if the borrower is unable to pay, unlike a piggyback loan where the lender takes in all the deficits.


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

How can buyers avoid bearing the expense of PMI?

As a result of The Homeowners Protection Act of 1998, lenders are required to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount on nearly all loans. Smart home owners can get off the hook ahead of time. The law guarantees that, at the request of the homeowner, the PMI must be dropped when the principal amount equals just 80 percent.

It can take a significant number of years to get to the point where the principal is only 80% of the original amount borrowed, so it's necessary to know how your Texas home has appreciated in value. After all, all of the appreciation you've achieved over the years counts towards abolishing PMI. So why pay it after the balance of your loan has dropped below the 80% mark? Your neighborhood may not follow national trends and/or your home could have secured equity before things simmered down. So even when nationwide trends predict falling home values, you should realize that real estate is local.

A certified, Texas licensed real estate appraiser can help homeowners figure out just when their home's equity goes over the 20% point, as it's a difficult thing to know. It is an appraiser's job to know 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. When faced with data from an appraiser, the mortgage company will often cancel the PMI with little trouble. At which time, the homeowner can delight in the savings from that point on.


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

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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