Have equity in your home? Want a lower payment? An appraisal from AM Appraisals, LLC can help you get rid of your PMI.When purchasing a home, a 20% down payment is typically the standard. The lender's liability is often only the remainder between the home value and the amount due on the loan, so the 20% supplies a nice buffer against the charges of foreclosure, selling the home again, and typical value changes in the event a purchaser is unable to pay.During the recent mortgage upturn that our country recently experienced, it was customary to see lenders reducing down payments to 10, 5 or often 0 percent. A lender is able to endure the additional risk of the reduced down payment with Private Mortgage Insurance or PMI. This supplementary policy takes care of the lender in the event a borrower is unable to pay on the loan and the market price of the house is lower than the balance of the loan. Since the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and on many occasions isn't even tax deductible, PMI is costly to a borrower. It's favorable for the lender because they secure the money, and they get the money if the borrower defaults, unlike a piggyback loan where the lender absorbs all the costs.
How home owners can avoid bearing the expense of PMIWith the implementation of The Homeowners Protection Act of 1998, lenders are required to automatically terminate the PMI when the principal balance of the loan equals 78 percent of the primary loan amount on nearly all loans. The law stipulates that, upon request of the homeowner, the PMI must be released when the principal amount reaches only 80 percent. So, keen home owners can get off the hook a little early.It can take several years to get to 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, every bit of appreciation you've gained over the years counts towards dismissing PMI. So why pay it after the balance of your loan has fallen below the 80% mark? Even when nationwide trends signify falling home values, be aware that real estate is local. Your neighborhood might not be heeding the national trends and/or your home may have secured equity before things simmered down. The toughest thing for many people to figure out is whether their home equity has exceeded the 20% point. An accredited, Texas licensed real estate appraiser can certainly help. As appraisers, it's our job to keep up with the market dynamics of our area. At AM Appraisals, LLC, we know when property values have risen or declined. We're experts at pinpointing value trends in League City, Galveston County, and surrounding areas. Faced with figures from an appraiser, the mortgage company will most often cancel the PMI with little effort. At which time, the homeowner can retain 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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