Greg Scorza Real Estate Appraiser can help you remove your Private Mortgage InsuranceWhen purchasing a home, a 20% down payment is typically the standard. Considering the liability for the lender is oftentimes only the difference between the home value and the sum outstanding on the loan, the 20% provides a nice buffer against the expenses of foreclosure, selling the home again, and natural value variations in the event a purchaser is unable to pay.Banks were accepting down payments dropping to 10, 5 and often 0 percent during the mortgage boom of the mid 2000s. A lender is able to endure the added risk of the small down payment with Private Mortgage Insurance or PMI. PMI covers the lender if a borrower doesn't pay on the loan and the market price of the home is less than the balance of the loan. PMI is pricey to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is rolled into the mortgage payment and often isn't even tax deductible. Unlike a piggyback loan where the lender takes in all the costs, PMI is favorable for the lender because they collect the money, and they are covered if the borrower is unable to pay.
How can a homeowner refrain from bearing the expense of PMI?The Homeowners Protection Act of 1998 obligates the lenders on most loans to automatically terminate the PMI when the principal balance of the loan reaches 78 percent of the original loan amount. Acute homeowners can get off the hook ahead of time. The law pledges that, upon request of the home owner, the PMI must be dropped when the principal amount reaches just 80 percent.It can take many years to get to the point where the principal is only 80% of the original amount borrowed, so it's crucial to know how your Texas home has appreciated in value. After all, all of the appreciation you've gained over the years counts towards abolishing PMI. So what's the reason for paying it after your loan balance has dropped below the 80% threshold? Your neighborhood might not adhere to national trends and/or your home may have gained equity before things simmered down. So even when nationwide trends predict declining home values, you should understand that real estate is local. The toughest thing for many consumers to determine is whether their home equity has exceeded the 20% point. An accredited, Texas licensed real estate appraiser can certainly help. As appraisers, it's our job to understand the market dynamics of our area. At Greg Scorza Real Estate Appraiser, we know when property values have risen or declined. We're experts at pinpointing value trends in Dallas, Dallas County, and surrounding areas. When faced with figures from an appraiser, the mortgage company will usually do away with the PMI with little anxiety. At that time, the homeowner can relish 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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