Reliant Appraisals can help you remove your Private Mortgage Insurance
A 20% down payment is typically the standard when buying a house. The lender's risk is usually only the remainder between the home value and the sum due on the loan, so the 20% adds a nice buffer against the charges of foreclosure, reselling the home, and typical value variations on the chance that a purchaser doesn't pay.
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 manage the additional risk of the small down payment? The answer is Private Mortgage Insurance or PMI. This supplemental plan takes care of the lender in case a borrower is unable to pay on the loan and the worth of the home is lower than what the borrower still owes on the loan.
Because the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and frequently isn't even tax deductible, PMI can be pricey to a borrower. Opposite from a piggyback loan where the lender takes in all the losses, PMI is advantageous for the lender because they acquire the money, and they receive payment if the borrower defaults.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How can home buyers refrain from bearing the cost of PMI?
With the utilization of The Homeowners Protection Act of 1998, on most loans lenders are obligated to automatically eliminate the PMI when the principal balance of the loan equals 78 percent of the initial loan amount. Smart homeowners can get off the hook a little earlier. The law stipulates that, at the request of the home owner, the PMI must be dropped when the principal amount reaches only 80 percent.
It can take countless years to get to the point where the principal is only 20% of the initial loan amount, so it's important to know how your home has increased in value. After all, all of the appreciation you've gained over time counts towards abolishing PMI. So why pay it after the balance of your loan has fallen below the 80% threshold? Your neighborhood might not be adhering to the national trends and/or your home could have acquired equity before things cooled off, so even when nationwide trends indicate plummeting home values, you should realize that real estate is local.
The difficult thing for almost all homeowners to know is just when their home's equity rises above the 20% point. A certified, licensed real estate appraiser can definitely help. As appraisers, it's our job to understand the market dynamics of our area. At Reliant Appraisals, we know when property values have risen or declined. We're experts at identifying value trends in San Antonio, Bexar County and surrounding areas. Faced with data from an appraiser, the mortgage company will most often eliminate the PMI with little trouble. At that 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: