Russell Appraisal Service can help you remove your Private Mortgage Insurance
It's largely understood that a 20% down payment is the standard when getting a mortgage. Since the liability for the lender is often only the remainder between the home value and the sum due on the loan, the 20% supplies a nice buffer against the expenses of foreclosure, reselling the home, and typical value variationson the chance that a borrower defaults.
Lenders were accepting down payments down to 10, 5 and often 0 percent in the peak of last decade's mortgage boom. How does a lender endure the added risk of the low down payment? The solution is Private Mortgage Insurance or PMI. This added policy guards the lender if a borrower doesn't pay on the loan and the worth of the home is less than what is owed on the loan.
Since the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and generally isn't even tax deductible, PMI is pricey to a borrower. It's money-making for the lender because they collect the money, and they get paid if the borrower defaults, separate from a piggyback loan where the lender consumes all the deficits.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How home buyers can refrain from bearing the cost of PMI
The Homeowners Protection Act of 1998 obligates the lenders on nearly all loans to automatically terminate the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount. Keen home owners can get off the hook a little early. The law stipulates that, at the request of the homeowner, the PMI must be abandoned when the principal amount reaches just 80 percent.
Since it can take many years to reach the point where the principal is just 20% of the original amount borrowed, it's important to know how your home has grown in value. After all, all of the appreciation you've gained over time counts towards removing PMI. So why pay it after your loan balance has dropped below the 80% mark? Even when nationwide trends signify plummeting home values, understand that real estate is local. Your neighborhood may not be following the national trends and/or your home might have secured equity before things settled down.
The difficult thing for many home owners to understand is just when their home's equity rises above the 20% point. An accredited, licensed real estate appraiser can definitely help. It is an appraiser's job to recognize the market dynamics of their area. At Russell Appraisal Service, we're masters at recognizing value trends in Pflugerville, Travis 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 that time, the homeowner can delight in the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link:
Would you like to save money by not having to pay for Private Mortgage Insurance? We can help. Simply fill out the form below as completely as possible and we'll send you information on how to save PMI expenses, with no obligation to you. We guarantee your privacy.