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Bain & Associates, Inc. Real Estate Appraisers can help you remove your Private Mortgage Insurance
When buying a house, a 20% down payment is usually the standard.
The lender's risk is generally only the difference between the home value and the sum due on the loan, so the 20% supplies a nice buffer against the charges of foreclosure, selling the home again, and natural value variations in the event a borrower is unable to pay.
During the recent mortgage boom of the mid 2000s, it became common to see lenders reducing down payments to 10, 5 or often 0 percent.
How does a lender handle the increased risk of the low down payment? The answer is Private Mortgage Insurance or PMI.
This supplemental plan covers the lender in the event a borrower is unable to pay on the loan and the value of the house is less than what is owed on the loan.
Because the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and many times isn't even tax deductible, PMI is costly to a borrower.
It's money-making for the lender because they secure the money, and they get paid if the borrower doesn't pay, separate from a piggyback loan where the lender consumes all the deficits.
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Does your monthly mortgage payment have a lineitem for PMI? Call Bain & Associates, Inc. Real Estate Appraisers today at (972) 398-2535 or send us an e-mail. A current appraisal could save you thousands.
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How buyers can keep from paying PMI
The Homeowners Protection Act of 1998 requires the lenders on nearly all loans to automatically eliminate the PMI when the principal balance of the loan reaches 78 percent of the primary loan amount.
Savvy homeowners can get off the hook a little early. The law pledges that, at the request of the homeowner, the PMI must be abandoned when the principal amount equals only 80 percent.
Since it can take many years to reach the point where the principal is just 80% of the original amount borrowed, it's important to know how your Texas home has grown in value.
After all, any appreciation you've gained over time counts towards abolishing PMI. So why pay it after the balance of your loan has fallen below the 80% mark?
Your neighborhood may not follow national trends and/or your home may have gained equity before things simmered down. So even when nationwide trends indicate a reduction in home values, you should know most importantly that real estate is local.
The toughest thing for almost all consumers to figure out is whether their home equity has exceeded the 20% point. An accredited, Texas licensed real estate appraiser can definitely help.
It is an appraiser's job to recognize the market dynamics of their area.
At Bain & Associates, Inc. Real Estate Appraisers, we know when property values have risen or declined. We're experts at pinpointing value trends in Plano, Collin County, and surrounding areas.
When faced with information from an appraiser, the mortgage company will often remove the PMI with little trouble. At that time, the home owner can delight in the savings from that point on.
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Did you secure your mortgage with less than 20% down? Call Bain & Associates, Inc. Real Estate Appraisers today at (972) 398-2535. You may be able to cancel 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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