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Have equity in your home? Want a lower payment? An appraisal from Appraisal Professionals, LLC can help you get rid of your PMI.
A 20% down payment is typically accepted when buying a house.
Because the liability for the lender is usually only the remainder between the home value and the sum due on the loan, the 20% provides a nice buffer against the expenses of foreclosure, reselling the home, and natural value fluctuations in the event a borrower doesn't pay.
During the recent mortgage upturn of the last decade, it was common to see lenders reducing down payments to 10, 5, 3 or even 0 percent.
How does a lender manage the added risk of the small down payment? The answer is Private Mortgage Insurance or PMI.
PMI takes care of the lender in the event 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 is pricey to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and on many occasions isn't even tax deductible.
Unlike a piggyback loan where the lender absorbs all the damages, PMI is money-making for the lender because they collect the money, and they are covered if the borrower doesn't pay.
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Is PMI included in your monthly house payment? 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.
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How can a buyer avoid paying PMI?
The Homeowners Protection Act of 1998 forces the lenders on the majority of loans to automatically cease the PMI when the principal balance of the loan equals 78 percent of the primary loan amount.
The law promises that, upon request of the home owner, the PMI must be released when the principal amount reaches just 80 percent. So, wise homeowners can get off the hook sooner than expected.
Because it can take several years to reach the point where the principal is only 80% of the initial amount borrowed, it's essential to know how your Texas home has grown in value.
After all, every bit of appreciation you've acquired over the years counts towards dismissing PMI. So what's the reason for paying it after the balance of your loan has dropped below the 80% mark?
Your neighborhood may not conform to national trends and/or your home might have acquired equity before things simmered down. So even when nationwide trends hint at declining home values, you should realize that real estate is local.
A certified, Texas licensed real estate appraiser can help home owners figure out just when their home's equity goes over the 20% point, as it's a tough thing to know.
It is an appraiser's job to keep up with the market dynamics of their area.
At Appraisal Professionals, LLC, we know when property values have risen or declined. We're masters at determining value trends in Austin, Williamson County, and surrounding areas.
Faced with figures from an appraiser, the mortgage company will most often remove the PMI with little anxiety. At that time, the home owner can delight in the savings from that point on.
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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 current value could save you thousands.
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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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