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

When buying a house, a 20% down payment is typically the standard. Because the risk for the lender is oftentimes only the remainder between the home value and the amount remaining on the loan, the 20% adds a nice buffer against the expenses of foreclosure, reselling the home, and natural value changes on the chance that a borrower is unable to pay.

During the recent mortgage boom of the last decade, it was widespread to see lenders only asking for down payments of 10, 5, 3 or even 0 percent. How does a lender endure the added risk of the small down payment? The solution is Private Mortgage Insurance or PMI. This supplementary policy covers the lender if a borrower defaults on the loan and the value of the property is less than what is owed on the loan.

PMI is costly to a borrower because the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and frequently isn't even tax deductible. Instead of a piggyback loan where the lender takes in all the damages, PMI is lucrative for the lender because they secure the money, and they get the money if the borrower is unable to pay.

The savings from dropping your PMI pays for the appraisal in no time. Appraisal Professionals, LLC has years of experience with value trends in the city of Kyle and Hays County. Contact us today.

How homebuyers can keep from paying PMI

With the passage of The Homeowners Protection Act of 1998, lenders are forced to automatically terminate the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount on nearly all loans. The law designates that, at the request of the homeowner, the PMI must be released when the principal amount reaches just 80 percent. So, keen homeowners can get off the hook sooner than expected.

It can take many years to arrive at the point where the principal is only 80% of the initial loan amount, so it's important to know how your Texas home has grown in value. After all, all of the appreciation you've gained over the years counts towards dismissing PMI. So why should you pay 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 may have acquired equity before the economy cooled off. So even when nationwide trends predict a reduction in home values, you should understand that real estate is local.

An accredited, Texas licensed real estate appraiser can help homeowners figure out if their equity has reached the 20% point, as it's a tough thing to know. Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job! At Appraisal Professionals, LLC, we know when property values have risen or declined. We're experts at identifying value trends in Kyle, Hays County, and surrounding areas. When faced with data from an appraiser, the mortgage company will generally drop the PMI with little anxiety. At which time, the homeowner can enjoy the savings from that point on.

The savings from dropping the PMI required when you got your mortgage will make up for the price of the appraisal in no time. Nobody is more qualified than Appraisal Professionals, LLC when it comes to appreciating values in Kyle 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