You might be still paying a great deal of money for a line item you took on when you bought your home called Private Mortgage Insurance. Normally it’s great to be insured, but this is not true in any way with PMI because the “private” party benefiting from this insurance is the bank, never the homeowner. Don’t feel alone, about 18% of homeowners have taken on PMI payments when they purchase the home because their down payment wasn’t quite large enough. These payments cost homeowners “between 0.5 and 1.5% of the loan amount on average each year — or between $30 and $70 monthly per $100,000 borrowed,” according to Freddie Mac. Once you do the math on how much this equals per year, the critical value and immediate need to remove PMI becomes crystal clear. In fact, removing PMI when you reach 80 percent home equity is more than a good idea, it’s your right according to the Federal Homeowners Protection Act.
Rising Sacramento Home Prices Equal Early Removal and Big Savings
You may not realize it, but your home’s value is rising rapidly thanks to those homes you see selling at all-time-high prices and even above list price, adjusting your homes’ worth up as well. You took on PMI because you didn’t have the 20% down needed to avoid this fee. But think about it, has your home reached a value where you have more than 20% equity built up? It is likely that you suddenly have. According to sources like Forbes, “You should have your home reappraised, and if you owe less than 80% of the newly appraised value, it’s time to get in touch with your lender to have your PMI canceled.” Working with an appraiser is an affordable and speedy way to remove your PMI and much more effective than waiting for your lender to do the right thing and remove it when the magic number has been reached.
A good appraiser will help you establish proof of your home’s value and help you in this process. An appraisal is often overlooked or unknown to many homeowners but vital in saving money as soon as possible. There are two methods to achieve PMI removal:
Proof of Current Value
Providing evidence in the form of an appraisal that your mortgage balance has reached 80% of your home’s original value is one solid way to prove your mortgage is ready for PMI removal to the lender.
Verifying it’s Higher Value
An appraisal that shows your home has increased in value can also help you remove PMI from your mortgage bills. If you have at least a 75% Lease-to-Value ratio you can have PMI removed based on your home’s new appraised value.
Remove PMI From Your Home Once and For All
Once the PMI is gone from your mortgage bill, the monthly savings will begin to really add up, especially if you’re able to stop making payments years earlier than you would otherwise. Now is the time to act with home prices at a record high in the Sacramento region, it is a great time to move quickly and begin paying a lower mortgage. If you think your home’s value has reached the mark, let us help retain your hard-earned money. Get in touch now by completing our contact form and we will call you within 24 hours to help.