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

A 20% down payment is usually accepted when getting a mortgage. Because the risk for the lender is usually only the difference between the home value and the sum due on the loan, the 20% supplies a nice cushion against the costs of foreclosure, selling the home again, and typical value fluctuations in the event a purchaser defaults.

The market was accepting down payments discounted to 10, 5 and often 0 percent during the mortgage boom of the last decade. A lender is able to handle the additional 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 value of the property is less than what is owed on the loan.

Since the $40-$50 a month per $100,000 borrowed is lumped into the mortgage monthly payment and many times isn't even tax deductible, PMI can be expensive to a borrower. It's beneficial for the lender because they secure the money, and they are covered if the borrower doesn't pay, unlike a piggyback loan where the lender absorbs all the damages.


The money you keep from cancelling the PMI required when you got your mortgage will make up for the price of the appraisal in a matter of months. Nobody is more qualified than Appraisal Professionals, LLC when it comes to appreciating values in the city of Austin and Travis County. Contact us today.

How can a home buyer keep from bearing the cost of PMI?

As a result of The Homeowners Protection Act of 1998, lenders are forced to automatically stop the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount on most loans. Savvy homeowners can get off the hook sooner than expected. The law pledges that, at the request of the home owner, the PMI must be released when the principal amount equals just 80 percent.

Since it can take a significant number of years to arrive at the point where the principal is only 80% of the initial amount borrowed, it's necessary to know how your Texas home has increased in value. After all, any appreciation you've gained over time counts towards dismissing PMI. So why pay it after your loan balance has dropped below the 80% mark? Even when nationwide trends hint at decreasing home values, realize that real estate is local. Your neighborhood may not be following the national trends and/or your home may have secured equity before things declined.

The hardest thing for most consumers to determine is whether their home equity has exceeded the 20% point. A certified, Texas licensed real estate appraiser can definitely help. It is an appraiser's job to understand the market dynamics of their area. 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. When faced with figures from an appraiser, the mortgage company will usually cancel the PMI with little anxiety. At that time, the home owner can relish the savings from that point on.


Does your monthly loan payment include a fee for PMI? Call Appraisal Professionals, LLC today at (512) 535-5007 or send us an e-mail. Documentation of your home's present value 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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