Appraisal Professionals, LLC can help you remove your Private Mortgage Insurance

A 20% down payment is typically the standard when purchasing a home. Considering the risk for the lender is oftentimes only the remainder between the home value and the amount due on the loan, the 20% supplies a nice buffer against the costs of foreclosure, selling the home again, and regular value fluctuations in the event a borrower defaults.

During the recent mortgage upturn of the mid 2000s, it became widespread to see lenders making deals with down payments of 10, 5, 3 or often 0 percent. How does a lender handle the added risk of the low down payment? The solution is Private Mortgage Insurance or PMI. This additional policy covers the lender in the event a borrower defaults on the loan and the value of the property is less than what is owed on the loan.

Because the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and oftentimes isn't even tax deductible, PMI can be costly to a borrower. As opposed to a piggyback loan where the lender consumes all the damages, PMI is money-making for the lender because they obtain the money, and they receive payment if the borrower doesn't pay.


The amount you keep from getting rid of the PMI required when you got your mortgage will make up for the cost of the appraisal in a matter of months. Appraisal Professionals, LLC are experts when it comes to value trends in the city of Kyle and Hays County. Contact us today.

How home buyers can prevent paying 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 primary loan amount. Keen home owners can get off the hook a little early. The law designates that, upon request of the homeowner, the PMI must be dropped when the principal amount equals only 80 percent.

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

A certified, Texas licensed real estate appraiser can help home owners figure out just when their home's equity goes over the 20% point, as it's a difficult 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 recognizing value trends in Kyle, Hays County, and surrounding areas. When faced with figures from an appraiser, the mortgage company will often cancel the PMI with little effort. At which time, the home owner can retain the savings from that point on.


Did you secure your mortgage with less than 20% down? Contact Appraisal Professionals, LLC today at (512) 627-4017. You may be able to save money by removing 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