Let Appraisal Professionals help you learn if you can eliminate your PMIWhen buying a house, a 20% down payment is typically the standard. The lender's liability is oftentimes only the difference between the home value and the amount outstanding on the loan, so the 20% adds a nice buffer against the charges of foreclosure, reselling the home, and typical value variations in the event a borrower is unable to pay. During the recent mortgage upturn of the last decade, it became common to see lenders requiring down payments of 10, 5 or sometimes 0 percent. How does a lender manage the added risk of the small down payment? The solution is Private Mortgage Insurance or PMI. This supplemental policy takes care of the lender in the event a borrower doesn't pay on the loan and the worth of the property is less than what is owed on the loan. Since the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and frequently isn't even tax deductible, PMI is costly to a borrower. Different from a piggyback loan where the lender consumes all the costs, PMI is advantageous for the lender because they obtain the money, and they receive payment 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 home buyers keep from bearing the expense of PMI?With the employment of The Homeowners Protection Act of 1998, on most loans lenders are obligated to automatically stop the PMI when the principal balance of the loan equals 78 percent of the initial loan amount. Savvy home owners can get off the hook a little earlier. The law pledges that, upon request of the homeowner, the PMI must be dropped when the principal amount reaches just 80 percent. It can take countless years to get to the point where the principal is just 20% of the initial amount borrowed, so it's important to know how your home has appreciated in value. After all, all of the appreciation you've gained over time counts towards dismissing PMI. So what's the reason for paying it after your loan balance has fallen below the 80% mark? Despite the fact that nationwide trends predict plummeting home values, realize that real estate is local. Your neighborhood may not be reflecting the national trends and/or your home may have secured equity before things cooled off. The hardest thing for almost all home owners to know is just when their home's equity goes over the 20% point. A certified, licensed real estate appraiser can surely help. It's an appraiser's job to know the market dynamics of their area. At Appraisal Professionals, we're experts at analyzing value trends in Kyle, Hays County and surrounding areas, and we know when property values have risen or declined. Faced with data from an appraiser, the mortgage company will usually drop the PMI with little trouble. At which time, the home owner can delight in the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: |