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Let Zacour and Associates, Inc. help you discover if you can eliminate your PMI
When purchasing a home, a 20% down payment is usually the standard.
Considering the liability for the lender is usually only the remainder between the home value and the amount outstanding on the loan, the 20% supplies a nice buffer against the charges of foreclosure, selling the home again, and regular value changes on the chance that a borrower doesn't pay.
Lenders were accepting down payments discounted to 10, 5 and even 0 percent during the mortgage boom of the last decade.
A lender is able to handle the added risk of the minimal down payment with Private Mortgage Insurance or PMI.
PMI covers the lender if a borrower doesn't pay on the loan and the value of the house is lower than what is owed on the loan.
PMI is costly to a borrower in that the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and oftentimes isn't even tax deductible.
As opposed to a piggyback loan where the lender absorbs all the costs, PMI is profitable for the lender because they obtain the money, and they get paid if the borrower defaults.
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Did you secure your mortgage with less than 20% down? Contact Zacour and Associates, Inc. today at 915-581-1141. You may be able to cancel your Private Mortgage Insurance payment.
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How can home owners keep from paying PMI?
The Homeowners Protection Act of 1998 forces the lenders on the majority of loans to automatically cease the PMI when the principal balance of the loan equals 78 percent of the initial loan amount.
Keen home owners can get off the hook beforehand. The law designates that, upon request of the home owner, the PMI must be released when the principal amount reaches just 80 percent.
Considering it can take many years to reach the point where the principal is just 80% of the initial loan amount, it's crucial to know how your Texas home has increased in value.
After all, every bit of appreciation you've obtained over the years counts towards dismissing PMI. So why should you pay it after your loan balance has fallen below the 80% mark?
Even when nationwide trends forecast declining home values, understand that real estate is local. Your neighborhood may not be following the national trends and/or your home might have secured equity before things simmered down.
The toughest thing for most consumers to determine is just when their home's equity rises above the 20% point. A certified, Texas licensed real estate appraiser can definitely help.
Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job!
At Zacour and Associates, Inc., we know when property values have risen or declined. We're experts at pinpointing value trends in El Paso, El Paso County, and surrounding areas.
Faced with data from an appraiser, the mortgage company will often remove the PMI with little effort. At that time, the homeowner can relish the savings from that point on.
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Did you have less than 20% to put down on your mortgage? Contact Zacour and Associates, Inc. today at 915-581-1141. You may be able to get rid of 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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