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

When getting a mortgage, a 20% down payment is usually the standard. The lender's liability is oftentimes only the difference between the home value and the amount remaining on the loan, so the 20% supplies a nice cushion against the charges of foreclosure, selling the home again, and natural value fluctuations in the event a borrower doesn't pay.

During the recent mortgage upturn of the mid 2000s, it became customary to see lenders reducing down payments to 10, 5 or often 0 percent. How does a lender manage the additional risk of the low down payment? The solution is Private Mortgage Insurance or PMI. PMI protects the lender in the event a borrower defaults on the loan and the value of the house is lower than what is owed on the loan.

PMI is pricey to a borrower in that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and on many occasions isn't even tax deductible. It's favorable for the lender because they acquire the money, and they receive payment if the borrower is unable to pay, different from a piggyback loan where the lender consumes all the losses.


Did you secure your mortgage with less than 20% down? Contact Appraisal Professionals, LLC today at (512) 535-5007. You may be able to get rid of your Private Mortgage Insurance premium.

How can home buyers keep from bearing the cost of PMI?

The Homeowners Protection Act of 1998 forces the lenders on most loans to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the original loan amount. The law guarantees that, upon request of the homeowner, the PMI must be dropped when the principal amount equals only 80 percent. So, smart homeowners can get off the hook a little early.

Because it can take many years to reach the point where the principal is only 80% of the initial loan amount, it's important to know how your Texas home has appreciated in value. After all, every bit of appreciation you've accomplished over time counts towards dismissing PMI. So what's the reason for paying it after the balance of your loan has dropped below the 80% threshold? Your neighborhood may not adhere to national trends and/or your home could have secured equity before things cooled off. So even when nationwide trends indicate decreasing home values, you should realize that real estate is local.

The hardest thing for almost all consumers to determine is just when their home's equity rises above 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 masters at determining value trends in Austin, Hays County, and surrounding areas, and we know when property values have risen or declined. Faced with information from an appraiser, the mortgage company will usually cancel the PMI with little trouble. At that time, the home owner can relish the savings from that point on.


The amount you keep from cancelling the PMI required when you got your mortgage pays for the appraisal in no time. Appraisal Professionals, LLC stays current with value trends in Austin and Hays 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