Let Appraisal Professionals, LLC help you decide if you can get rid of your PMI

When buying a house, a 20% down payment is typically the standard. Considering the risk for the lender is generally only the remainder between the home value and the amount remaining on the loan, the 20% provides a nice cushion against the expenses of foreclosure, reselling the home, and natural value changes in the event a borrower defaults.

During the recent mortgage boom of the mid 2000s, it was customary to see lenders reducing down payments to 10, 5 or even 0 percent. A lender is able to handle the additional risk of the minimal down payment with Private Mortgage Insurance or PMI. This supplemental policy guards the lender in case a borrower doesn't pay on the loan and the market price of the home is lower than the balance of the loan.

Because the $40-$50 a month per $100,000 borrowed is rolled into the mortgage payment and often isn't even tax deductible, PMI is pricey to a borrower. Instead of a piggyback loan where the lender consumes all the damages, PMI is money-making for the lender because they secure the money, and they receive payment if the borrower defaults.


Did you have less than 20% to put down on your mortgage? Contact Appraisal Professionals, LLC today at (512) 535-5007 to see if you can cancel your Private Mortgage Insurance premium.

How homebuyers can avoid bearing the expense of PMI

The Homeowners Protection Act of 1998 forces the lenders on nearly all loans to automatically cancel the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount. Keen home owners can get off the hook beforehand. The law pledges that, at the request of the homeowner, the PMI must be released when the principal amount reaches just 80 percent.

Since it can take several years to reach the point where the principal is just 80% of the initial amount borrowed, it's essential to know how your Texas home has grown in value. After all, all of the appreciation you've achieved over time counts towards dismissing PMI. So what's the reason for paying it after your loan balance has dropped below the 80% mark? Your neighborhood may not conform to national trends and/or your home might have secured equity before things declined. So even when nationwide trends forecast a reduction in home values, you should realize that real estate is local.

The hardest thing for almost all homeowners to figure out is whether their home equity has exceeded the 20% point. A certified, Texas licensed real estate appraiser can definitely help. It is an appraiser's job to understand the market dynamics of their area. At Appraisal Professionals, LLC, we know when property values have risen or declined. We're experts at determining value trends in Austin, Travis County, and surrounding areas. When faced with information from an appraiser, the mortgage company will generally eliminate the PMI with little anxiety. At that time, the home owner can retain the savings from that point on.


The savings from cancelling the PMI required when you got your mortgage will make up for the cost of the appraisal in a matter of months. Appraisal Professionals, LLC has years of experience with real estate value trends in Austin and Travis County. Contact us today.

Want to learn more about PMI and the Homeowners Protection Act? Click this link:

Cancellation of Private Mortgage Insurance: Federal Law May Save You Hundreds of Dollars Each Year