Stribling-Probandt Appraisals can help you remove your Private Mortgage Insurance
It's generally understood that a 20% down payment is accepted when buying a house. Because the risk for the lender is generally only the remainder between the home value and the amount due on the loan, the 20% supplies a nice cushion against the charges of foreclosure, selling the home again, and regular value changes in the event a borrower doesn't pay.
The market was working with down payments dropping to 10, 5 and frequently 0 percent in the peak of last decade's mortgage boom. How does a lender endure the added risk of the small down payment? The solution is Private Mortgage Insurance or PMI. This supplementary plan takes care of the lender if a borrower doesn't pay on the loan and the value of the property is lower than what is owed on the loan.
PMI is pricey to a borrower because the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and often isn't even tax deductible. Separate from a piggyback loan where the lender takes in all the deficits, PMI is money-making for the lender because they secure the money, and they are covered if the borrower is unable to pay.
The savings from getting rid of the PMI required when you got your mortgage will make up for the cost of the appraisal in no time. Nobody is more qualified than Stribling-Probandt Appraisals when it comes to appreciating values in the city of San Angelo and Tom Green County. Contact us today.
How home buyers can prevent bearing the cost of PMI
As a result of The Homeowners Protection Act of 1998, lenders are required to automatically stop the PMI when the principal balance of the loan equals 78 percent of the original loan amount on nearly all loans. The law pledges that, at the request of the homeowner, the PMI must be dropped when the principal amount equals just 80 percent. So, keen homeowners can get off the hook sooner than expected.
Since it can take many years to arrive at the point where the principal is only 80% of the initial amount of the loan, it's necessary to know how your Texas home has increased in value. After all, every bit of appreciation you've obtained over time counts towards abolishing PMI. So why should you pay it after the balance of your loan has fallen below the 80% threshold? Even when nationwide trends hint at lower overall home values, realize that real estate is local. Your neighborhood might not be reflecting the national trends and/or your home may have secured equity before things cooled off.
The toughest thing for most homeowners to figure out is just when their home's equity goes over 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 Stribling-Probandt Appraisals, we're masters at determining value trends in San Angelo, Tom Green County, and surrounding areas, and we know when property values have risen or declined. When faced with data from an appraiser, the mortgage company will most often cancel the PMI with little anxiety. At which time, the home owner can relish the savings from that point on.
Did you secure your mortgage with less than 20% down? Contact Stribling-Probandt Appraisals today at (325)658-2773 to see if you can get rid of your Private Mortgage Insurance premium.