Have equity in your home? Want a lower payment? An appraisal from BrandonBrooks can help you get rid of your PMI.It's largely known that a 20% down payment is accepted when getting a mortgage. Because the risk for the lender is generally only the remainder between the home value and the sum remaining on the loan, the 20% provides a nice cushion against the costs of foreclosure, reselling the home, and natural value changes in the event a purchaser defaults.The market was taking down payments discounted to 10, 5 and frequently 0 percent in the peak of last decade's mortgage boom. A lender is able to manage the increased risk of the small down payment with Private Mortgage Insurance or PMI. This supplementary plan guards the lender if a borrower defaults on the loan and the value of the home is lower than the loan balance. PMI is pricey to a borrower in that the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and many times isn't even tax deductible. It's lucrative for the lender because they obtain the money, and they receive payment if the borrower doesn't pay, unlike a piggyback loan where the lender absorbs all the costs.
How can homebuyers keep from paying PMI?As a result of The Homeowners Protection Act of 1998, lenders are required to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the original loan amount on nearly all loans. The law designates that, at the request of the homeowner, the PMI must be released when the principal amount reaches only 80 percent. So, smart homeowners can get off the hook a little earlier.Because it can take several years to arrive at the point where the principal is just 80% of the initial loan amount, it's crucial to know how your Texas home has increased in value. After all, every bit of appreciation you've gained over the years counts towards removing PMI. So why should you pay it after your loan balance has dropped below the 80% mark? Even when nationwide trends hint at decreasing home values, realize that real estate is local. Your neighborhood might not be reflecting the national trends and/or your home could have secured equity before things simmered down. The difficult thing for most homeowners to figure out is just when their home's equity goes over the 20% point. An accredited, Texas licensed real estate appraiser can definitely help. Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job! At BrandonBrooks, we know when property values have risen or declined. We're masters at pinpointing value trends in Dallas, Dallas County, and surrounding areas. When faced with figures from an appraiser, the mortgage company will usually cancel the PMI with little trouble. At that time, the home owner can delight in 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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