About a month ago I shared a video here talking about removing PMI from your mortgage. I wanted to update that video because I took my own advice and I did it! I was able to get my monthly mortgage reduced $131 every month by having my PMI removed.
If you did not catch that video, I’ll bring you up to speed. If you put less than 20% down when you bought your home, chances are, every month a part of your mortgage payment goes to pay PMI. This can be hundreds of dollars paid every month.
What is PMI?
It’s Private Mortgage Insurance. It protects the lender, not the borrower by the way, if you stop making payments on your loan. It’s usually on any conventional mortgage where the down payment on the home was less than 20%.
It can be paid by a monthly premium (which is the most common), it can be paid by a one-time upfront premium that you pay at closing, or it can be a hybrid of the two.
The cost of PMI is determined by the total loan amount and your credit score and can be as high as 2.25% of your mortgage. In other words, a lot of money.
So my question to you is,
Take a look at this.
In June of 2018, the average price for a home in Rockwall County was $353,132. Just three years later, the average price has increased to $438,268. That’s an increase of 24%. Some pockets of Rockwall have seen even higher increases.
This made a lightbulb go off for me for all of my clients who purchased three years ago and only put 5% down on their mortgage. It’s quite likely they now have enough equity to remove PMI from their mortgage.
How can you get rid of this expense?
You could pay down your loan to reach 20% equity in your home based on your current mortgage. Or, you could refinance. Before starting the process of refinancing your home, you should keep in mind there are costs associated with going through this process. So you want to make sure you’re talking with a lender who will do a cost vs. savings analysis to see how long it will take you to break even on the cost of the refinance versus only looking at your monthly savings.
The third thing you can do, and it’s what I did, is contact your current lender to ask if you can remove PMI with a new appraisal. In my case, my lender said they would allow it if the appraisal shows that I now have a loan to value ratio of 75%. The risk to me was the cost of the appraisal of $550.
Well, because as a Realtor I happen to have access to sales information, I was able to determine that it was worth it to me to take that risk. Now, I can’t give an actual appraisal amount because I’m not a licensed appraiser, but I can get a good idea.
The good news for me, I was right to get the appraisal done. The appraiser determined that my house had increased 30% in value in just a little over two years. This means I was able to remove my PMI and I’m now saving $131 a month on my mortgage.
If that’s information you’d be interested in having, I want to help you and I’d love to get that to you. If you want to see what homes comparable to yours have sold for recently to determine if it’s worth it to you to do this, I can get you that information. This is something that we provide to our clients whenever they’re considering a sale and I’d be happy to offer this for free to you.
I will warn you about going to automated value generators. Those tools use algorithms to determine value and fail to take into account the specifics on how your home compares to others and actual sale prices since Texas is a non disclosure state and those tools don’t have access to the actual sales numbers from the MLS.
Here’s what you do to get started: go to livinginrockwall.com and click on the button that says, “Get My Equity Analysis.” Provide some details on your property and your current loan payoff amount and I’ll get that analysis to you within three business days.
If that sounds like something you’d be interested in, that website again is LivingInRockwall.com.
If you’ve found this video helpful, remember to subscribe to the Living in Rockwall pages on Facebook, Instagram, and YouTube for more information about real estate in the area and market updates.
We will start with interest rates.
Our interest rates are still below 3% at 2.98% with .6% .
So let’s dig into the data for June and see how the market performed.
For this local market data, I use numbers from single-family home sales in Rockwall County. These numbers are based on sales data from June.
The average sales price is at $440,400. That’s a 20.6% increase from one year ago.
The number of homes for sale is at 261 homes. We are down 54.8% in the number of homes available to buy in Rockwall County.
Rockwall County had 274 sales in June, a 2.5% decrease over last year.
Homes sold 83.8% faster in June than they did last year, and we averaged just 6 days on the market.
Our months of inventory went up just a hair from .9 months of supply in June to now having 1.1 months of supply. This number tells us that based on current demand, if no new listings came on the market, it would take just about three weeks for all of the current inventory to be purchased. We listed 312 homes in May which is .3% more than last year.
Our average sales price per square foot is at $170 per square foot, a 27.8% increase from last year.
There might be some light at the end of this tunnel for buyers! Our supply is increasing which should help soften the run up in pricing we’ve consistently seen lately. Another interesting indicator of what’s to come, our real estate photographers are busy again! We might even see more of a softening in the upcoming months as the typical buying season starts to come to an end as folks aim to be settled in their new home by the time school starts.
As always, if you’re curious to know what your home could sell for, let’s talk. Visit LivingInRockwall.com and click on the equity analysis button to see what your home could sell for in today’s market.
Jennifer Shannon is a Texas real estate agent and broker, licensed since 2006.