Have equity in your home? Want a lower payment? An appraisal from Anderson Appraisal, LLC can help you get rid of your PMI.
When getting a mortgage, a 20% down payment is typically the standard. The lender's liability is generally only the difference between the home value and the sum outstanding on the loan, so the 20% supplies a nice cushion against the costs of foreclosure, selling the home again, and regular value changes in the event a borrower defaults.
The market was accepting down payments as low as 10, 5 and often 0 percent in the peak of last decade's mortgage boom. How does a lender handle the additional risk of the small down payment? The answer is Private Mortgage Insurance or PMI. PMI guards the lender in the event a borrower defaults on the loan and the worth of the property is less than the loan balance.
PMI can be costly to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and oftentimes isn't even tax deductible. It's beneficial for the lender because they obtain the money, and they get the money if the borrower is unable to pay, opposite from a piggyback loan where the lender takes in all the damages.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How buyers can prevent bearing the cost of PMI
With the utilization of The Homeowners Protection Act of 1998, on most loans lenders are obligated to automatically cease the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount. The law promises that, at the request of the home owner, the PMI must be released when the principal amount reaches only 80 percent. So, wise homeowners can get off the hook a little early.
Considering it can take countless 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 increased in value. After all, all of the appreciation you've acquired over time counts towards abolishing PMI. So what's the reason for paying it after the balance of your loan has dropped below the 80% mark? Your neighborhood may not be reflecting the national trends and/or your home might have secured equity before things settled down, so even when nationwide trends indicate falling home values, you should understand that real estate is local.
The hardest thing for most homeowners to know is just when their home's equity rises above the 20% point. An accredited, licensed real estate appraiser can certainly help. It is an appraiser's job to keep up with the market dynamics of their area. At Anderson Appraisal, LLC, we know when property values have risen or declined. We're masters at determining value trends in Amarillo, Randall County and surrounding areas. When faced with information from an appraiser, the mortgage company will generally do away with the PMI with little effort. At which 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: