Let Appraisal Professionals, LLC help you discover if you can cancel your PMI

A 20% down payment is usually accepted when getting a mortgage. Because the liability for the lender is usually only the difference between the home value and the sum remaining on the loan, the 20% provides a nice cushion against the expenses of foreclosure, selling the home again, and typical value changes on the chance that a borrower doesn't pay.

During the recent mortgage upturn of the mid 2000s, it was customary to see lenders reducing down payments to 10, 5 or often 0 percent. A lender is able to manage the added risk of the low down payment with Private Mortgage Insurance or PMI. PMI covers the lender in case a borrower is unable to pay on the loan and the value of the house is less than the balance of the loan.

Because the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and frequently isn't even tax deductible, PMI can be costly to a borrower. It's beneficial for the lender because they obtain the money, and they get the money if the borrower defaults, separate from a piggyback loan where the lender takes in all the damages.


Does your monthly house payment have a lineitem for PMI? Call Appraisal Professionals, LLC today at (512) 535-5007 or send us an e-mail. Documentation of your home's current value could save you thousands.

How buyers can keep from bearing the expense of PMI

The Homeowners Protection Act of 1998 forces the lenders on the majority of loans to automatically stop the PMI when the principal balance of the loan equals 78 percent of the primary loan amount. Wise home owners can get off the hook sooner than expected. The law stipulates that, at the request of the homeowner, the PMI must be released when the principal amount equals just 80 percent.

Considering it can take several years to arrive at the point where the principal is only 80% of the original loan amount, it's essential to know how your Texas home has appreciated in value. After all, every bit of appreciation you've achieved over time counts towards abolishing PMI. So why pay it after your loan balance has dropped below the 80% threshold? Your neighborhood might not adhere to national trends and/or your home could have secured equity before the economy simmered down. So even when nationwide trends hint at falling home values, you should know most importantly that real estate is local.

The toughest thing for almost all people to determine is just when their home's equity goes over the 20% point. An accredited, Texas licensed real estate appraiser can certainly help. Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job! At Appraisal Professionals, LLC, we're masters at recognizing value trends in Austin, Travis County, and surrounding areas, and we know when property values have risen or declined. When faced with data from an appraiser, the mortgage company will generally drop the PMI with little effort. At that time, the home owner can delight in the savings from that point on.


Is PMI a lineitem in your monthly mortgage payment? Call Appraisal Professionals, LLC today at (512) 535-5007 or send us an e-mail. Documentation of your home's current value 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