Boldrick Appraisal can help you remove your Private Mortgage InsuranceWhen getting a mortgage, a 20% down payment is usually the standard. Because the liability for the lender is often only the difference between the home value and the sum due on the loan, the 20% supplies a nice buffer against the charges of foreclosure, selling the home again, and natural value changes in the event a purchaser is unable to pay.During the recent mortgage boom of the mid 2000s, it was common to see lenders only asking for down payments of 10, 5 or sometimes 0 percent. A lender is able to manage the added risk of the small down payment with Private Mortgage Insurance or PMI. This additional plan guards the lender in the event a borrower doesn't pay on the loan and the market price of the house is lower than the loan balance. PMI is pricey to a borrower in that the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and frequently isn't even tax deductible. Different from a piggyback loan where the lender consumes all the damages, PMI is profitable for the lender because they collect the money, and they are covered if the borrower doesn't pay.
How can homeowners keep from paying PMI?With the implementation of The Homeowners Protection Act of 1998, lenders are obligated to automatically terminate the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount on nearly all loans. The law designates that, at the request of the homeowner, the PMI must be abandoned when the principal amount reaches only 80 percent. So, savvy homeowners can get off the hook ahead of time.Since it can take many years to get to the point where the principal is only 80% of the initial amount of the loan, it's crucial to know how your Texas home has appreciated in value. After all, all of the appreciation you've acquired over the years counts towards removing PMI. So what's the reason for paying it after the balance of your loan has dropped below the 80% threshold? Your neighborhood may not conform to national trends and/or your home could have acquired equity before the economy simmered down. So even when nationwide trends hint at decreasing home values, you should understand that real estate is local. An accredited, Texas licensed real estate appraiser can help homeowners figure out just when their home's equity goes over the 20% point, as it's a difficult thing to know. It's an appraiser's job to recognize the market dynamics of their area. At Boldrick Appraisal, we're masters at identifying value trends in Austin, 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 do away with the PMI with little anxiety. At which time, the home owner can relish 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
|
||||||||||||||||||
