Let Harper & Strickland, Inc. help you decide if you can eliminate your PMIIt's widely known that a 20% down payment is common when buying a house. The lender's risk is usually only the remainder between the home value and the sum outstanding on the loan, so the 20% supplies a nice cushion against the charges of foreclosure, selling the home again, and natural value changes on the chance that a purchaser doesn't pay. The market was working with 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 increased risk of the small down payment? The solution is Private Mortgage Insurance or PMI. This added plan guards the lender in the event a borrower is unable to pay on the loan and the market price of the house is lower than the balance of the loan. Since the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and oftentimes isn't even tax deductible, PMI is pricey to a borrower. It's lucrative for the lender because they acquire the money, and they get the money if the borrower is unable to pay, contradictory to a piggyback loan where the lender consumes all the costs. 
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How homeowners can avoid bearing the cost of PMIWith the utilization of The Homeowners Protection Act of 1998, on nearly all loans lenders are forced to automatically cancel the PMI when the principal balance of the loan reaches 78 percent of the primary loan amount. Wise homeowners can get off the hook sooner than expected. The law states that, at the request of the homeowner, the PMI must be dropped when the principal amount reaches just 80 percent. It can take countless years to reach the point where the principal is only 20% of the original loan amount, so it's necessary to know how your home has increased in value. After all, every bit of appreciation you've accomplished over the years counts towards dismissing PMI. So why pay it after the balance of your loan has dropped below the 80% mark? Despite the fact that nationwide trends hint at plummeting home values, be aware that real estate is local. Your neighborhood may not be reflecting the national trends and/or your home could have secured equity before things simmered down. The difficult thing for most homeowners to know is just when their home's equity rises above the 20% point. A certified, licensed real estate appraiser can definitely help. As appraisers, it's our job to know the market dynamics of our area. At Harper & Strickland, Inc., we're masters at analyzing value trends in Fairview, Collin County and surrounding areas, and we know when property values have risen or declined. Faced with figures from an appraiser, the mortgage company will often eliminate the PMI with little effort. At which time, the homeowner can relish the savings from that point on.
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