Let ValueTex Appraisal Services help you decide if you can get rid of your PMIIt's widely inferred that a 20% down payment is the standard when getting a mortgage. Considering the risk for the lender is generally only the difference 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 typical value variations in the event a purchaser is unable to pay.Lenders were working with down payments dropping to 10, 5 and frequently 0 percent in the peak of last decade's mortgage boom. How does a lender endure the increased risk of the low down payment? The solution is Private Mortgage Insurance or PMI. This additional policy guards the lender if a borrower defaults on the loan and the value of the house is lower than the loan balance. PMI can be pricey to a borrower because the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and frequently isn't even tax deductible. It's favorable for the lender because they secure the money, and they are covered if the borrower is unable to pay, unlike a piggyback loan where the lender takes in all the deficits.
How can a homeowner refrain from bearing the cost of PMI?With the implementation of The Homeowners Protection Act of 1998, lenders are required to automatically stop the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount on nearly all loans. Savvy home owners can get off the hook beforehand. The law stipulates that, at the request of the home owner, the PMI must be dropped when the principal amount reaches just 80 percent.It can take many years to arrive at the point where the principal is only 80% of the original amount of the loan, so it's essential to know how your Texas home has increased in value. After all, all of the appreciation you've obtained 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% threshold? Even when nationwide trends signify lower overall home values, understand that real estate is local. Your neighborhood may not be following the national trends and/or your home might have acquired equity before things simmered down. A certified, Texas licensed real estate appraiser can help home owners figure out if their equity has exceeed the 20% point, as it's a difficult thing to know. It is an appraiser's job to recognize the market dynamics of their area. At ValueTex Appraisal Services, we know when property values have risen or declined. We're experts at recognizing value trends in Angleton, Brazoria County, and surrounding areas. When faced with information from an appraiser, the mortgage company will generally remove the PMI with little trouble. At which time, the homeowner can enjoy the savings from that point on.
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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