In April of 2018, the median price for a home in Rockwall County was $290,500. Just three years later, the median price has increased to $332,977. That’s an increase of about 15%. 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.
So let’s back up a few steps. What is PMI?
PMI is . 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.
How can you get rid of this expense?
You could pay down your loan to reach 20% equity in your home. 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.
And here’s a pro tip from local lender, Jason Cooley, with Integrity Mortgage. 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.
So, before you start, you should get a sense of what your home could sell for in this market and get an equity analysis. 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 for you.
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.
As a bonus, with interest rates so low, when you refinance you might bring your monthly payment down even more than just the cost of your PMI.
If that sounds like something you’d be interested in, that website again is LivingInRockwall.com. And if you need a recommendation for a lender, I can help you there too.
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.
Jennifer Shannon is a Texas real estate agent and broker, licensed since 2006.