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Let The Appraisal Firm help you determine if you can cancel your PMI
It's typically understood that a 20% down payment is the standard when purchasing a home.
Since the risk for the lender is generally only the remainder between the home value and the sum outstanding on the loan, the 20% adds a nice buffer against the charges of foreclosure, reselling the home, and typical value variations in the event a borrower defaults.
Banks were taking down payments discounted to 10, 5 and often 0 percent in the peak of last decade's mortgage boom.
A lender is able to manage the additional risk of the low down payment with Private Mortgage Insurance or PMI.
This supplementary plan covers the lender in case a borrower doesn't pay on the loan and the market price of the home is less than the balance of the loan.
PMI is pricey to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and oftentimes isn't even tax deductible.
It's favorable for the lender because they collect the money, and they receive payment if the borrower defaults, as opposed to a piggyback loan where the lender takes in all the costs.
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Did you have less than 20% to put down on your mortgage? Contact The Appraisal Firm today at (469) 854-1668. You may be able to save money by removing your Private Mortgage Insurance premium.
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How buyers can avoid bearing the cost of PMI
As a result of The Homeowners Protection Act of 1998, lenders are forced to automatically eliminate the PMI when the principal balance of the loan reaches 78 percent of the initial loan amount on nearly all loans.
The law stipulates that, at the request of the home owner, the PMI must be dropped when the principal amount reaches just 80 percent. So, acute home owners can get off the hook ahead of time.
It can take several years to arrive at the point where the principal is only 80% of the initial amount borrowed, so it's necessary to know how your Texas home has appreciated in value.
After all, all of the appreciation you've acquired over the years counts towards abolishing PMI. So what's the reason for paying it after your loan balance has dropped below the 80% mark?
Your neighborhood might not conform to national trends and/or your home may have acquired equity before the economy declined. So even when nationwide trends predict decreasing home values, you should realize that real estate is local.
The difficult thing for many homeowners to determine is whether their home equity has exceeded the 20% point. An accredited, Texas licensed real estate appraiser can definitely help.
It is an appraiser's job to recognize the market dynamics of their area.
At The Appraisal Firm, we know when property values have risen or declined. We're experts at identifying value trends in Frisco, Collin County, and surrounding areas.
Faced with figures from an appraiser, the mortgage company will generally eliminate the PMI with little effort. At which time, the homeowner can retain the savings from that point on.
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Has your real estate appreciated since you first purchased? Call The Appraisal Firm today at (469) 854-1668. You may be able to get rid of your Private Mortgage Insurance payment.
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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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