Integrity Appraisers of Texas, LLC. can help you remove your Private Mortgage Insurance
It's typically understood that a 20% down payment is common when getting a mortgage. Considering the risk for the lender is generally only the remainder between the home value and the sum remaining on the loan, the 20% supplies a nice buffer against the costs of foreclosure, selling the home again, and regular value variationson the chance that a purchaser defaults.
Banks were working with down payments as low as 10, 5 and often 0 percent during the mortgage boom of the mid 2000s. A lender is able to handle the additional risk of the low down payment with Private Mortgage Insurance or PMI. PMI guards the lender in case a borrower defaults on the loan and the worth of the home is less than the balance of the loan.
PMI can be pricey to a borrower in that the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and often isn't even tax deductible. Contradictory to a piggyback loan where the lender absorbs all the deficits, PMI is profitable for the lender because they secure the money, and they get the money if the borrower defaults.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How can homebuyers 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 initial loan amount. Keen home owners can get off the hook a little earlier. The law states that, at the request of the homeowner, the PMI must be abandoned when the principal amount equals only 80 percent.
It can take countless years to reach the point where the principal is just 20% of the initial amount borrowed, so it's necessary to know how your home has grown in value. After all, any appreciation you've achieved over the years counts towards dismissing PMI. So why pay it after the balance of your loan has dropped below the 80% threshold? Your neighborhood might not be adopting the national trends and/or your home might have secured equity before things cooled off, so even when nationwide trends forecast declining home values, you should understand that real estate is local.
An accredited, licensed real estate appraiser can help home owners understand just when their home's equity rises above the 20% point, as it's a tough thing to know. As appraisers, it's our job to recognize the market dynamics of our area. At Integrity Appraisers of Texas, LLC., we know when property values have risen or declined. We're experts at recognizing value trends in McKinney, Collin County and surrounding areas. When faced with data from an appraiser, the mortgage company will usually do away with the PMI with little trouble. At which time, the homeowner can relish the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: