TXMetro Property Group LLC can help you remove your Private Mortgage Insurance
It's generally known that a 20% down payment is accepted when buying a house. The lender's risk is often only the remainder between the home value and the amount outstanding on the loan, so the 20% supplies a nice buffer against the costs of foreclosure, reselling the home, and regular value changes in the event a borrower defaults.
Banks were working with down payments as low as 10, 5 and often 0 percent in the peak of last decade's mortgage boom. How does a lender endure the increased risk of the small down payment? The solution is Private Mortgage Insurance or PMI. This added plan covers the lender if a borrower doesn't pay on the loan and the value of the property is lower than what is owed on the loan.
PMI can be expensive to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and generally isn't even tax deductible. It's advantageous for the lender because they acquire the money, and they get paid if the borrower doesn't pay, opposite from a piggyback loan where the lender consumes all the costs.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How can a buyer avoid paying PMI?
With the utilization of The Homeowners Protection Act of 1998, on nearly all loans lenders are required to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the initial loan amount. Smart home owners can get off the hook a little earlier. The law stipulates that, at the request of the home owner, the PMI must be released when the principal amount reaches only 80 percent.
Because it can take many years to reach the point where the principal is just 20% of the initial loan amount, it's crucial to know how your home has appreciated in value. After all, every bit of appreciation you've gained over the years counts towards dismissing PMI. So why should you pay it after the balance of your loan has dropped below the 80% mark? Your neighborhood might not be reflecting the national trends and/or your home could have acquired equity before things cooled off, so even when nationwide trends forecast falling home values, you should realize that real estate is local.
An accredited, licensed real estate appraiser can help homeowners understand just when their home's equity goes over the 20% point, as it's a tough thing to know. It is an appraiser's job to keep up with the market dynamics of their area. At TXMetro Property Group LLC, we're experts at pinpointing value trends in Lewisville, Tarrant County and surrounding areas, and we know when property values have risen or declined. When faced with data from an appraiser, the mortgage company will generally eliminate the PMI with little effort. At that 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: