Have equity in your home? Want a lower payment? An appraisal from Reliant Appraisals can help you get rid of your PMI.
It's largely understood that a 20% down payment is the standard when getting a mortgage. Because the liability for the lender is oftentimes only the remainder between the home value and the amount remaining on the loan, the 20% provides a nice buffer against the costs of foreclosure, reselling the home, and natural value changeson the chance that a purchaser is unable to pay.
The market was taking down payments as low as 10, 5 and often 0 percent in the peak of last decade's mortgage boom. A lender is able to endure the added risk of the reduced down payment with Private Mortgage Insurance or PMI. This supplementary plan covers the lender in the event a borrower doesn't pay on the loan and the worth of the house is less than the balance of the loan.
PMI can be costly to a borrower because the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and generally isn't even tax deductible. It's advantageous for the lender because they collect the money, and they receive payment if the borrower defaults, unlike a piggyback loan where the lender absorbs all the losses.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How can a buyer prevent bearing the expense of PMI?
With the employment of The Homeowners Protection Act of 1998, on nearly all loans lenders are obligated to automatically stop the PMI when the principal balance of the loan reaches 78 percent of the initial loan amount. Keen home owners can get off the hook ahead of time. The law guarantees that, at the request of the home owner, the PMI must be abandoned when the principal amount reaches just 80 percent.
It can take many years to arrive at the point where the principal is just 20% of the initial amount of the loan, so it's essential to know how your home has appreciated in value. After all, any appreciation you've acquired over the years counts towards dismissing PMI. So why should you pay it after the balance of your loan has fallen below the 80% mark? Despite the fact that nationwide trends indicate falling home values, be aware that real estate is local. Your neighborhood might not be following the national trends and/or your home could have acquired equity before things settled down.
A certified, licensed real estate appraiser can help home owners understand just when their home's equity goes over the 20% point, as it's a difficult thing to know. As appraisers, it's our job to know the market dynamics of our area. At Reliant Appraisals, we're experts at determining value trends in San Antonio, Bexar County and surrounding areas, and we know when property values have risen or declined. When faced with information from an appraiser, the mortgage company will often eliminate the PMI with little anxiety. 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: