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Let G&S Appraisal Service, LLC help you discover if you can get rid of your PMI
It's widely inferred that a 20% down payment is the standard when purchasing a home.
The lender's only liability is typically just the difference between the home value and the sum due on the loan, so the 20% provides a nice cushion against the costs of foreclosure, selling the home again, and natural value changes on the chance that a borrower defaults.
Lenders were accepting down payments as low as 10, 5 and frequently 0 percent during the mortgage boom of the last decade.
A lender is able to manage the additional risk of the small down payment with Private Mortgage Insurance or PMI.
This supplementary policy takes care of the lender in the event a borrower defaults on the loan and the value of the property is less than the balance of the loan.
PMI can be expensive to a borrower in that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage monthly payment and frequently isn't even tax deductible.
As opposed to a piggyback loan where the lender takes in all the deficits, PMI is favorable for the lender because they collect the money, and they receive payment if the borrower is unable to pay.
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The savings from getting rid of your PMI pays for the appraisal in a matter of months. Nobody is more qualified than G&S Appraisal Service, LLC when it comes to appreciating values in the city of Trophy Club and Denton County. Contact us today.
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How can home buyers avoid paying PMI?
With the passage of The Homeowners Protection Act of 1998, lenders are required to automatically terminate the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount on nearly all loans.
Acute homeowners can get off the hook ahead of time. The law guarantees that, at the request of the home owner, the PMI must be abandoned when the principal amount equals just 80 percent.
Because it can take a significant number of years to arrive at the point where the principal is only 80% of the initial amount of the loan, it's important to know how your Texas home has increased in value.
After all, every bit of appreciation you've achieved over the years counts towards abolishing PMI. So why should you pay it after the balance of your loan has dropped below the 80% mark?
Even when nationwide trends forecast falling home values, understand that real estate is local. Your neighborhood might not be adhering to the national trends and/or your home may have gained equity before things cooled off.
The toughest thing for most homeowners to determine is whether their home equity has exceeded the 20% point. An accredited, Texas licensed real estate appraiser can surely help.
It's an appraiser's job to recognize the market dynamics of their area.
At G&S Appraisal Service, LLC, we're experts at pinpointing value trends in Trophy Club, Denton County, and surrounding areas, and we know when property values have risen or declined.
When faced with information from an appraiser, the mortgage company will usually cancel the PMI with little trouble. At that time, the home owner can relish the savings from that point on.
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Did you have less than 20% to put down on your mortgage? Call G&S Appraisal Service, LLC today at 817-437-9774 to see if you can save money by removing your Private Mortgage Insurance payment.
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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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