Let Appraisal Professionals, LLC help you learn if you can eliminate your PMI

A 20% down payment is typically accepted when buying a house. The lender's risk is oftentimes only the difference between the home value and the amount outstanding on the loan, so the 20% adds a nice cushion against the costs of foreclosure, selling the home again, and regular value fluctuations on the chance that a purchaser doesn't pay.

Banks were working with down payments dropping to 10, 5 and often 0 percent during the mortgage boom of the last decade. A lender is able to manage the added risk of the low down payment with Private Mortgage Insurance or PMI. This supplementary policy covers the lender in case a borrower doesn't pay on the loan and the market price of the house is lower than what is owed on the loan.

Because the $40-$50 a month per $100,000 borrowed is lumped into the mortgage monthly payment and many times isn't even tax deductible, PMI is pricey to a borrower. Different from a piggyback loan where the lender consumes all the deficits, PMI is advantageous for the lender because they obtain the money, and they get the money if the borrower is unable to pay.


Has your home value appreciated since you first purchased? Contact Appraisal Professionals, LLC today at (512) 627-4017. You may be able to cancel your Private Mortgage Insurance premium.

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

As a result of The Homeowners Protection Act of 1998, lenders are obligated to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the primary loan amount on nearly all loans. Acute home owners can get off the hook sooner than expected. The law guarantees that, at the request of the home owner, the PMI must be abandoned when the principal amount equals only 80 percent.

It can take many years to reach the point where the principal is just 80% of the original loan amount, so it's crucial to know how your Texas home has grown in value. After all, any appreciation you've obtained over time counts towards removing PMI. So why pay it after the balance of your loan has fallen below the 80% mark? Your neighborhood might not adhere to national trends and/or your home could have acquired equity before the economy declined. So even when nationwide trends signify decreasing home values, you should understand that real estate is local.

The hardest thing for most homeowners to determine is whether their home equity has exceeded the 20% point. An accredited, Texas licensed real estate appraiser can certainly help. It is an appraiser's job to keep up with the market dynamics of their area. At Appraisal Professionals, LLC, we're experts at analyzing value trends in Kyle, Hays County, and surrounding areas, and we know when property values have risen or declined. Faced with data from an appraiser, the mortgage company will most often cancel the PMI with little anxiety. At which time, the homeowner can delight in 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. 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