Have equity in your home? Want a lower payment? An appraisal from Infinite Appraisal Services, LLC can help you get rid of your PMI.It's largely inferred that a 20% down payment is the standard when getting a mortgage. The lender's only liability is usually just the difference between the home value and the sum due on the loan, so the 20% supplies a nice cushion against the charges of foreclosure, reselling the home, and natural value changes on the chance that a purchaser is unable to pay.
Lenders were taking down payments dropping to 10, 5 and frequently 0 percent during the mortgage boom of the last decade. A lender is able to handle the increased risk of the low down payment with Private Mortgage Insurance or PMI. PMI protects the lender in the event a borrower defaults on the loan and the market price of the home is less than the balance of the loan.
Since the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and many times isn't even tax deductible, PMI can be expensive to a borrower. Instead of a piggyback loan where the lender takes in all the losses, PMI is profitable for the lender because they collect the money, and they get paid if the borrower is unable to pay.
How home owners can keep from paying PMIAs a result of The Homeowners Protection Act of 1998, lenders are forced to automatically eliminate the PMI when the principal balance of the loan equals 78 percent of the original loan amount on most loans. Keen home owners can get off the hook sooner than expected. The law pledges that, upon request of the homeowner, the PMI must be abandoned when the principal amount reaches only 80 percent.
It can take several years to reach the point where the principal is only 80% of the original loan amount, so it's crucial to know how your Texas home has grown in value. After all, all of the appreciation you've accomplished over time counts towards removing PMI. So what's the reason for paying it after the balance of your loan has fallen below the 80% mark? Your neighborhood may not conform to national trends and/or your home may have acquired equity before the economy cooled off. So even when nationwide trends hint at a reduction in home values, you should realize that real estate is local.
A certified, Texas licensed real estate appraiser can help homeowners figure out if their equity has reached the 20% point, as it's a hard thing to know. As appraisers, it's our job to recognize the market dynamics of our area. At Infinite Appraisal Services, LLC, we know when property values have risen or declined. We're masters at recognizing value trends in Cedar Park, Williamson County, and surrounding areas. When faced with data from an appraiser, the mortgage company will often drop the PMI with little anxiety. At that time, the home owner can relish the savings from that point on.
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