Harper & Strickland, Inc. can help you remove your Private Mortgage InsuranceIt's generally understood that a 20% down payment is accepted when getting a mortgage. The lender's risk is generally only the remainder between the home value and the amount due on the loan, so the 20% provides a nice cushion against the charges of foreclosure, selling the home again, and typical value fluctuations in the event a borrower doesn't pay. The market was taking down payments as low as 10, 5 and often 0 percent in the peak of last decade's mortgage boom. How does a lender manage the additional risk of the small down payment? The solution is Private Mortgage Insurance or PMI. This supplemental plan guards the lender if a borrower is unable to pay on the loan and the market price of the house is lower than the loan balance. PMI can be pricey to a borrower because the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and often isn't even tax deductible. It's favorable for the lender because they collect the money, and they get paid if the borrower doesn't pay, separate from a piggyback loan where the lender consumes all the losses. 
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How can a buyer prevent paying PMI?With the utilization of The Homeowners Protection Act of 1998, on most loans lenders are required to automatically stop the PMI when the principal balance of the loan reaches 78 percent of the primary loan amount. Smart homeowners can get off the hook a little earlier. The law designates that, at the request of the homeowner, the PMI must be released when the principal amount reaches only 80 percent. Considering it can take many years to arrive at the point where the principal is only 20% of the original amount borrowed, it's important to know how your home has appreciated in value. After all, any appreciation you've achieved over time counts towards dismissing PMI. So why pay it after the balance of your loan has fallen below the 80% threshold? Despite the fact that nationwide trends indicate declining home values, be aware that real estate is local. Your neighborhood may not be reflecting the national trends and/or your home might have gained equity before things cooled off. The toughest thing for most homeowners to understand is just when their home's equity rises above the 20% point. An accredited, licensed real estate appraiser can surely help. As appraisers, it's our job to know the market dynamics of our area. At Harper & Strickland, Inc., we know when property values have risen or declined. We're experts at recognizing value trends in Fairview, Collin County and surrounding areas. When faced with data from an appraiser, the mortgage company will often remove the PMI with little anxiety. At that time, the homeowner can delight in the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: |