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

It's widely understood that a 20% down payment is accepted when purchasing a home. Since the liability for the lender is usually only the remainder between the home value and the sum outstanding on the loan, the 20% adds a nice buffer against the costs of foreclosure, reselling the home, and regular value fluctuations in the event a borrower is unable to pay.

During the recent mortgage upturn of the last decade, it was widespread to see lenders making deals with down payments of 10, 5 or even 0 percent. A lender is able to manage the added risk of the low down payment with Private Mortgage Insurance or PMI. This supplemental plan covers the lender if a borrower doesn't pay on the loan and the market price of the property is less than the loan balance.

PMI can be expensive to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and oftentimes isn't even tax deductible. It's beneficial for the lender because they obtain the money, and they get paid if the borrower defaults, separate from a piggyback loan where the lender consumes all the deficits.


Did you have less than 20% to put down on your mortgage? Contact Appraisal Professionals, LLC today at (512) 535-5007 to see if you can save money by removing your Private Mortgage Insurance premium.

How can a homebuyer prevent bearing the cost of PMI?

The Homeowners Protection Act of 1998 requires the lenders on most loans to automatically terminate the PMI when the principal balance of the loan reaches 78 percent of the original loan amount. The law pledges that, upon request of the home owner, the PMI must be abandoned when the principal amount equals only 80 percent. So, acute homeowners can get off the hook a little earlier.

Because it can take a significant number of years to get to the point where the principal is only 80% of the initial amount borrowed, it's essential to know how your Texas home has increased in value. After all, any appreciation you've acquired over time counts towards removing PMI. So why pay it after the balance of your loan has dropped below the 80% mark? Your neighborhood might not follow national trends and/or your home could have acquired equity before things cooled off. So even when nationwide trends signify a reduction in home values, you should know most importantly that real estate is local.

A certified, Texas licensed real estate appraiser can help homeowners figure out if their equity has made it to the 20% point, as it's a tough thing to know. It's an appraiser's job to keep up with the market dynamics of their area. At Appraisal Professionals, LLC, we're experts at determining value trends in Austin, Travis County, and surrounding areas, and we know when property values have risen or declined. Faced with information from an appraiser, the mortgage company will often remove the PMI with little trouble. At that time, the homeowner can delight in the savings from that point on.


Did you secure your mortgage with less than 20% down? Contact Appraisal Professionals, LLC today at (512) 535-5007 to see if you can save money by removing 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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