Appraisal Professionals, LLC can help you remove your Private Mortgage Insurance
It's typically inferred that a 20% down payment is the standard when getting a mortgage. The lender's liability is usually only the remainder between the home value and the sum remaining on the loan, so the 20% provides a nice cushion against the costs of foreclosure, selling the home again, and typical value fluctuations on the chance that a borrower defaults.
During the recent mortgage upturn of the last decade, it was common to see lenders taking down payments of 10, 5 or sometimes 0 percent. A lender is able to endure the additional risk of the minimal down payment with Private Mortgage Insurance or PMI. This added plan protects the lender if a borrower is unable to pay on the loan and the market price of the house is less than the loan balance.
Since the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and generally isn't even tax deductible, PMI can be pricey to a borrower. It's profitable for the lender because they collect the money, and they get paid if the borrower defaults, opposite from a piggyback loan where the lender consumes all the losses.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How can a homeowner keep from paying PMI?
The Homeowners Protection Act of 1998 obligates the lenders on most loans to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount. Acute home owners can get off the hook beforehand. The law promises that, upon request of the homeowner, the PMI must be abandoned when the principal amount equals only 80 percent.
It can take many years to get to the point where the principal is only 20% of the initial loan amount, so it's essential to know how your home has grown in value. After all, every bit of appreciation you've achieved over time counts towards removing PMI. So why pay it after the balance of your loan has fallen below the 80% mark? Your neighborhood may not be adhering to the national trends and/or your home may have secured equity before things simmered down, so even when nationwide trends forecast decreasing home values, you should understand that real estate is local.
A certified, licensed real estate appraiser can help home owners understand just when their home's equity goes over the 20% point, as it's a hard thing to know. As appraisers, it's our job to recognize the market dynamics of our area. At Appraisal Professionals, LLC, we know when property values have risen or declined. We're masters at determining value trends in Kyle, Hays County and surrounding areas. Faced with figures from an appraiser, the mortgage company will often remove the PMI with little trouble. At which time, the home owner can enjoy the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: