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

When purchasing a home, a 20% down payment is typically the standard. The lender's only risk is often just the remainder between the home value and the balance remaining on the loan, so the 20% adds a nice cushion against the expenses of foreclosure, selling the home again, and regular value changes on the chance that a purchaser is unable to pay.

Lenders were taking down payments dropping to 10, 5 and frequently 0 percent during the mortgage boom of the mid 2000s. A lender is able to manage the added risk of the small down payment with Private Mortgage Insurance or PMI. PMI protects the lender in case a borrower doesn't pay on the loan and the value of the property is less than what the borrower still owes on the loan.

Since the $40-$50 a month per $100,000 borrowed is lumped into the mortgage monthly payment and frequently isn't even tax deductible, PMI is pricey to a borrower. Different from a piggyback loan where the lender absorbs all the losses, PMI is advantageous for the lender because they acquire the money, and they are covered if the borrower is unable to pay.


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

How home buyers can prevent paying PMI

As a result of The Homeowners Protection Act of 1998, lenders are forced to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount on nearly all loans. The law states that, upon request of the home owner, the PMI must be released when the principal amount reaches just 80 percent. So, savvy home owners can get off the hook a little early.

It can take several years to get to the point where the principal is just 80% of the original amount of the loan, so it's necessary to know how your Texas home has appreciated in value. After all, all of the appreciation you've acquired over the years counts towards abolishing PMI. So why pay it after your loan balance has fallen below the 80% mark? Your neighborhood may not conform to national trends and/or your home might have gained equity before the economy simmered down. So even when nationwide trends signify decreasing home values, you should know most importantly that real estate is local.

An accredited, Texas licensed real estate appraiser can help homeowners figure out if their equity has exceeed the 20% point, as it's a difficult thing to know. 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 Austin, Travis County, and surrounding areas, and we know when property values have risen or declined. Faced with figures from an appraiser, the mortgage company will most often do away with the PMI with little trouble. At which time, the home owner can delight in the savings from that point on.


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

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