Let Marker Appraisal Service help you discover if you can cancel your PMIWhen getting a mortgage, a 20% down payment is typically the standard. Since the liability for the lender is generally only the remainder between the home value and the sum outstanding on the loan, the 20% adds a nice cushion against the charges of foreclosure, selling the home again, and natural value variations on the chance that a borrower defaults.During the recent mortgage boom of the last decade, it was customary to see lenders only asking for down payments of 10, 5 or even 0 percent. A lender is able to endure the increased risk of the low down payment with Private Mortgage Insurance or PMI. This additional plan guards the lender if a borrower doesn't pay on the loan and the value of the house is lower than the balance of the loan. Because the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and many times isn't even tax deductible, PMI can be pricey to a borrower. As opposed to a piggyback loan where the lender consumes all the damages, PMI is money-making for the lender because they obtain the money, and they are covered if the borrower doesn't pay.
How can a home owner avoid bearing the expense of PMI?With the implementation of The Homeowners Protection Act of 1998, lenders are obligated to automatically cease the PMI when the principal balance of the loan equals 78 percent of the initial loan amount on nearly all loans. Acute home owners can get off the hook sooner than expected. The law states that, upon request of the home owner, the PMI must be abandoned when the principal amount reaches just 80 percent.It can take many years to get to the point where the principal is only 80% of the original amount borrowed, so it's essential to know how your Texas home has increased in value. After all, any appreciation you've achieved over the years counts towards removing PMI. So why should you pay it after the balance of your loan has fallen below the 80% threshold? Your neighborhood may not follow national trends and/or your home may have secured equity before things simmered down. So even when nationwide trends forecast declining home values, you should realize that real estate is local. A certified, Texas licensed real estate appraiser can help home owners figure out just when their home's equity goes over the 20% point, as it's a hard thing to know. Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job! At Marker Appraisal Service, we know when property values have risen or declined. We're experts at pinpointing value trends in Granbury, Hood County, and surrounding areas. Faced with figures from an appraiser, the mortgage company will often remove the PMI with little trouble. At which time, the home owner 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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