Have equity in your home? Want a lower payment? An appraisal from Accurate Appraisal Associates CMAS can help you get rid of your PMI.It's widely inferred that a 20% down payment is the standard when getting a mortgage. Because the risk for the lender is generally only the remainder between the home value and the amount remaining on the loan, the 20% supplies a nice buffer against the charges of foreclosure, selling the home again, and natural value fluctuations on the chance that a borrower doesn't pay.During the recent mortgage boom of the last decade, it became common to see lenders only asking for down payments of 10, 5 or often 0 percent. How does a lender manage the additional risk of the small down payment? The solution is Private Mortgage Insurance or PMI. PMI guards the lender if a borrower doesn't pay on the loan and the value of the property is lower than the loan balance. PMI is pricey to a borrower in that the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and frequently isn't even tax deductible. It's beneficial for the lender because they obtain the money, and they get the money if the borrower is unable to pay, in contrast to a piggyback loan where the lender absorbs all the costs.
How can homebuyers avoid bearing the cost of PMI?The Homeowners Protection Act of 1998 requires the lenders on the majority of loans to automatically cease the PMI when the principal balance of the loan equals 78 percent of the initial loan amount. The law pledges that, at the request of the home owner, the PMI must be released when the principal amount equals just 80 percent. So, keen homeowners can get off the hook sooner than expected.Because it can take several years to reach the point where the principal is only 80% of the initial amount of the loan, it's crucial to know how your Texas home has appreciated in value. After all, all of the appreciation you've acquired over time counts towards removing PMI. So why should you pay it after your loan balance has fallen below the 80% threshold? Even when nationwide trends forecast falling home values, understand that real estate is local. Your neighborhood might not be reflecting the national trends and/or your home might have gained equity before things cooled off. An accredited, Texas licensed real estate appraiser can help home owners figure out if their equity has exceeed the 20% point, as it's a hard thing to know. It's an appraiser's job to recognize the market dynamics of their area. At Accurate Appraisal Associates CMAS, we know when property values have risen or declined. We're experts at recognizing value trends in Aransas Pass, San Patricio County, and surrounding areas. Faced with data from an appraiser, the mortgage company will usually remove the PMI with little effort. At which 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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