Appraisal Professionals, LLC can help you remove your Private Mortgage Insurance

When getting a mortgage, a 20% down payment is typically the standard. Considering the risk for the lender is usually only the difference between the home value and the amount outstanding on the loan, the 20% provides a nice cushion against the charges of foreclosure, selling the home again, and regular value changes on the chance that a purchaser doesn't pay.

During the recent mortgage boom of the last decade, it became common to see lenders only asking for down payments of 10, 5, 3 or sometimes 0 percent. How does a lender endure the additional risk of the low down payment? The solution is Private Mortgage Insurance or PMI. This supplementary plan protects the lender in case a borrower defaults on the loan and the value of the home is less than what is owed on the loan.

PMI can be expensive to a borrower because the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and oftentimes isn't even tax deductible. As opposed to a piggyback loan where the lender absorbs all the losses, PMI is beneficial for the lender because they secure the money, and they get the money if the borrower defaults.


The amount you keep from cancelling your PMI pays for the appraisal in a matter of months. Nobody is more qualified than Appraisal Professionals, LLC when it comes to appreciating values in the city of Kyle and Hays County. Contact us today.

How can a home owner keep from bearing the expense of PMI?

The Homeowners Protection Act of 1998 makes the lenders on nearly all loans to automatically cease the PMI when the principal balance of the loan equals 78 percent of the primary loan amount. Smart home owners can get off the hook a little early. The law stipulates that, upon request of the homeowner, the PMI must be abandoned when the principal amount reaches only 80 percent.

It can take a significant number of years to arrive at the point where the principal is just 80% of the initial amount borrowed, so it's essential to know how your Texas home has appreciated in value. After all, any appreciation you've obtained over time counts towards abolishing PMI. So what's the reason for paying it after the balance of your loan has fallen below the 80% threshold? Your neighborhood might not conform to national trends and/or your home could have gained equity before things declined. So even when nationwide trends forecast falling home values, you should know most importantly that real estate is local.

The difficult thing for almost all homeowners to determine is whether their home equity has exceeded the 20% point. A certified, Texas licensed real estate appraiser can surely help. As appraisers, it's our job to know the market dynamics of our area. At Appraisal Professionals, LLC, we're experts at pinpointing value trends in Kyle, Hays County, and surrounding areas, and we know when property values have risen or declined. When faced with figures from an appraiser, the mortgage company will usually do away with the PMI with little anxiety. At which time, the home owner can retain the savings from that point on.


Does your monthly loan payment have a lineitem for PMI? Call Appraisal Professionals, LLC today at (512) 627-4017 or send us an e-mail. A current appraisal could save you thousands.

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