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Let Anderson Appraisal, LLC help you figure out if you can cancel your PMI
It's largely understood that a 20% down payment is common when buying a house.
The lender's liability is generally only the remainder between the home value and the balance outstanding on the loan, so the 20% supplies a nice cushion against the charges of foreclosure, reselling the home, and typical value variations on the chance that a purchaser doesn't pay.
Banks were accepting down payments as low as 10, 5 and often 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 guards the lender if a borrower is unable to pay on the loan and the value of the property is lower than the loan balance.
Since the $40-$50 a month per $100,000 borrowed is rolled into the mortgage payment and frequently isn't even tax deductible, PMI can be expensive to a borrower.
Instead of a piggyback loan where the lender absorbs all the losses, PMI is favorable for the lender because they collect the money, and they get paid if the borrower is unable to pay.
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Does your monthly mortgage payment have a lineitem for PMI? Call Anderson Appraisal, LLC today at 806-359-0272 or send us an e-mail. Documentation of your home's current value could save you thousands.
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How can homebuyers refrain from paying PMI?
With the implementation of The Homeowners Protection Act of 1998, lenders are obligated to automatically terminate the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount on most loans.
Savvy home owners can get off the hook a little earlier. The law stipulates that, at the request of the homeowner, the PMI must be abandoned when the principal amount equals only 80 percent.
Considering it can take many years to arrive at the point where the principal is only 80% of the original amount borrowed, it's important to know how your Texas home has grown in value.
After all, all of the appreciation you've accomplished over time counts towards abolishing PMI. So why should you pay it after the balance of your loan has fallen below the 80% mark?
Even when nationwide trends forecast declining home values, be aware that real estate is local. Your neighborhood might not be adhering to the national trends and/or your home could have acquired equity before things cooled off.
An accredited, Texas licensed real estate appraiser can help home owners figure out just when their home's equity goes over the 20% point, as it's a tough thing to know.
Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job!
At Anderson Appraisal, LLC, we're experts at identifying value trends in Amarillo, Randall County, and surrounding areas, and we know when property values have risen or declined.
Faced with information from an appraiser, the mortgage company will most often eliminate the PMI with little anxiety. At that time, the home owner can relish the savings from that point on.
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Has your real estate appreciated since you first purchased? Call Anderson Appraisal, LLC today at 806-359-0272 to see if you can cancel your Private Mortgage Insurance premium.
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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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