Have equity in your home? Want a lower payment? An appraisal from JW Appraisal can help you get rid of your PMI.A 20% down payment is usually accepted when purchasing a home. The lender's only risk is often just the remainder between the home value and the sum outstanding on the loan, so the 20% provides a nice buffer against the charges of foreclosure, selling the home again, and typical value fluctuations in the event a borrower doesn't pay.During the recent mortgage upturn that our country recently experienced, it became customary to see lenders only asking for down payments of 10, 5, 3 or often 0 percent. A lender is able to endure the added risk of the small down payment with Private Mortgage Insurance or PMI. This additional policy takes care of the lender in the event a borrower doesn't pay on the loan and the market price of the home is lower than what the borrower still owes on the loan. PMI is pricey to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and many times isn't even tax deductible. Different from a piggyback loan where the lender absorbs all the damages, PMI is lucrative for the lender because they acquire the money, and they get the money if the borrower defaults.
How can a homeowner avoid bearing the expense of PMI?With the passage of The Homeowners Protection Act of 1998, lenders are obligated to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the primary loan amount on most loans. The law promises that, at the request of the homeowner, the PMI must be abandoned when the principal amount equals only 80 percent. So, acute home owners can get off the hook a little earlier.Since it can take several years to arrive at the point where the principal is just 80% of the original loan amount, it's crucial to know how your Texas home has appreciated in value. After all, all of the appreciation you've achieved over time counts towards abolishing PMI. So why pay it after the balance of your loan has fallen below the 80% mark? Even when nationwide trends predict declining home values, understand that real estate is local. Your neighborhood might not be adopting the national trends and/or your home may have secured equity before things simmered down. A certified, Texas licensed real estate appraiser can help homeowners figure out just when their home's equity rises above the 20% point, as it's a hard thing to know. Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job! At JW Appraisal, we know when property values have risen or declined. We're experts at identifying value trends in Austin, Travis County, and surrounding areas. When faced with data from an appraiser, the mortgage company will often 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: Cancellation of Private Mortgage Insurance: Federal Law May Save You Hundreds of Dollars Each Year
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