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Have equity in your home? Want a lower payment? An appraisal from Integrity Appraisal Services can help you get rid of your PMI.
A 20% down payment is typically the standard when buying a house.
The lender's only exposure is generally just the difference between the home value and the balance outstanding on the loan, so the 20% supplies a nice buffer against the expenses of foreclosure, reselling the home, and regular value fluctuations on the chance that a borrower is unable to pay.
During the recent mortgage upturn of the mid 2000s, it became widespread to see lenders reducing down payments to 10, 5 or even 0 percent.
How does a lender endure the increased risk of the small down payment? The answer is Private Mortgage Insurance or PMI.
This supplementary policy covers the lender in the event a borrower is unable to pay on the loan and the market price of the home is lower than the balance of the loan.
Because the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and oftentimes isn't even tax deductible, PMI can be pricey to a borrower.
Different from a piggyback loan where the lender takes in all the deficits, PMI is favorable for the lender because they collect the money, and they are covered if the borrower defaults.
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Did you have less than 20% to put down on your mortgage? Call Integrity Appraisal Services today at (915) 307-8349 to see if you can save money by removing your Private Mortgage Insurance payment.
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How can a homeowner avoid bearing the cost of PMI?
With the implementation of The Homeowners Protection Act of 1998, lenders are obligated to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the original loan amount on nearly all loans.
Smart home owners can get off the hook a little earlier. The law pledges that, upon request of the home owner, the PMI must be abandoned when the principal amount equals just 80 percent.
It can take many years to reach 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 acquired over time counts towards abolishing PMI. So what's the reason for paying it after the balance of your loan has dropped below the 80% threshold?
Your neighborhood may not follow national trends and/or your home could have acquired equity before things cooled off. So even when nationwide trends indicate a reduction in home values, you should understand that real estate is local.
The hardest thing for almost all people to determine is whether their home equity has exceeded the 20% point. An accredited, Texas licensed real estate appraiser can certainly help.
It is an appraiser's job to know the market dynamics of their area.
At Integrity Appraisal Services , we're masters at recognizing value trends in El Paso, El Paso County, and surrounding areas, and we know when property values have risen or declined.
Faced with figures from an appraiser, the mortgage company will generally do away with the PMI with little trouble. At which time, the homeowner can retain the savings from that point on.
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Has your real estate appreciated since you first purchased? Call Integrity Appraisal Services today at (915) 307-8349 to see if you can save money by removing your Private Mortgage Insurance premium.
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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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