1. REMOVE PRIVATE MORTGAGE INSURANCE (PMI)

Lenders typically require you to purchase private mortgage insurance (PMI) if you put less than 20% down on your house. PMI typically amounts to between 0.5%-1% of the purchase price. For a $200,000 mortgage, your PMI could be costing you $1,000 to $2,000 per year. However, on the date when your principal balance is scheduled to fall to 80% of the home’s original value (or in other words you build up at least 20% equity in your home), you have the right to request that your servicer cancel PMI.

To qualify to remove PMI, you can reach that 80% threshold by paying down your mortgage every month. Additionally, by reviewing this Annual Market Update you can determine if property values are rising in your neighborhood and you have gained 20% equity to remove your PMI.

For example: If you purchased your house for $250,000 a few years ago and based on the information provided to you in this report, you estimate the current value of your home to be $275,000. If your outstanding mortgage balance is less than $220,000 (or 80% of $275,000)then you may be able to remove the PMI. That’s a lower threshold than 80% of

$250,000, where your outstanding balance would be capped at $200,000 to qualify for PMI removal. In this case rising home values have increased your stake in the property, making you a potentially lower-risk borrower.

2. ENSURE THAT YOU ARE BEING TAXED PROPERLY

The one downside to escalating property value: higher property taxes. However, if you feel the tax jump from one year to another is higher than it should be, you can fight it by appealing the city’s assessment for a lower payment.

If — based on informal research or an official appraisal — you feel you’re overpaying on property taxes, you can appeal to your county or municipality to have your taxes lowered. The appeal process varies by area, but you’ll likely submit a written request within a specified timeline. If you suspect this might be the case for you, lets talk. I can help you with the process.

3. KEEP AN EYE ON THE MARKET TO DETERMINE THE BEST TIME TO SELL

Are you thinking that this year or in the next year or two? Keeping up with your homes value and talking with a Realtor can help give you you an idea of trends, growth, or slowdown in the area and your property in particular.

4. FIND OUT HOW MUCH EQUITY YOU HAVE BUILT UP

Understanding equity, or the current market value of your home minus your outstanding mortgage balance, puts you in a better place to understand your finances overall. You may be beginning to think about a move and knowing the value of your property could lead to an accelerated sale timeline. There’s no hard and fast rule when it comes to having enough equity to sell your home, but generally the more of your home you own, the more money you’ll make in the case of a sale.

Knowing how much equity you’ve built up will also give you the opportunity to take out a Home Equity Loan, a Line of Credit or Refinance. When you reach the point where the value of your home is more than what you owe on the mortgage, you may be able to borrow against your home equity. This can help you access the financing you need to add value to your property with a strategic home renovation or improvement, or even use it to invest in additional property. Knowing your home’s value can make the investment work for you.

5. ENSURE THAT YOUR HOMEOWNERS INSURANCE COVERS YOUR FULL PROPERTY VALUE

If you discover your home’s value has significantly increased, now may be a good time to reevaluate your homeowner’s insurance policy. If your home is undervalued in your policy, it could mean you’re not covered for the cost of its full value should something unfortunate were to happen. When you first bought your home and drew up an insurance policy, it should have covered at least what you paid for your home. As time has gone by, whether it’s a few years or decades, your home has likely increased in value. Your original home insurance policy might not be enough coverage. Your insurance company probably has policies in place for general inflation, but if you find your home has dramatically increased in value, or you’ve added an addition or made updates, it’s time to talk to your home insurance company. You’ll want to take a look at your insurance dwelling limit, or estimated cost to rebuild the home as it stands now. If you’ve updated or expanded your home, this will have changed since the time of purchase.

I am happy to provide you with yearly Market Updates. Feel free to call, email or text me. I’d love to help!