RAB Real Estate Services, LLC. can help you remove your Private Mortgage InsuranceWhen buying a house, a 20% down payment is typically the standard. The lender's risk is oftentimes only the remainder between the home value and the sum due on the loan, so the 20% provides a nice buffer against the charges of foreclosure, reselling the home, and regular value variations on the chance that a borrower defaults.
Banks 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 endure the added risk of the low down payment with Private Mortgage Insurance or PMI. This additional plan guards the lender in the event a borrower doesn't pay on the loan and the market price of the house is less than what is owed on the loan.
PMI can be expensive to a borrower because the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and frequently isn't even tax deductible. It's beneficial for the lender because they secure the money, and they get the money if the borrower doesn't pay, separate from a piggyback loan where the lender absorbs all the deficits.
How can a home owner prevent bearing the cost of PMI?The Homeowners Protection Act of 1998 makes the lenders on the majority of loans to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the primary loan amount. The law pledges that, at the request of the homeowner, the PMI must be dropped when the principal amount reaches just 80 percent. So, savvy home owners can get off the hook a little early.
Considering it can take many years to arrive at the point where the principal is only 80% of the original loan amount, it's necessary to know how your Texas home has grown in value. After all, every bit of appreciation you've accomplished over the years counts towards removing PMI. So why should you pay it after the balance of your loan has fallen below the 80% threshold? Your neighborhood might not conform to national trends and/or your home could have secured equity before things cooled off. So even when nationwide trends predict falling home values, you should realize that real estate is local.
The toughest thing for many homeowners to figure out is whether their home equity has exceeded the 20% point. A certified, Texas licensed real estate appraiser can surely help. Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job! At RAB Real Estate Services, LLC., we know when property values have risen or declined. We're masters at recognizing value trends in Lampasas, Lampasas County, and surrounding areas. When faced with data from an appraiser, the mortgage company will most often cancel the PMI with little effort. At which time, the home owner can enjoy the savings from that point on.
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