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

A 20% down payment is typically the standard when purchasing a home. The lender's liability is oftentimes only the remainder between the home value and the amount outstanding on the loan, so the 20% adds a nice cushion against the charges of foreclosure, reselling the home, and natural value changes on the chance that a borrower defaults.

Banks were working with down payments as low as 10, 5 and frequently 0 percent during the mortgage boom of the mid 2000s. How does a lender endure the increased risk of the small down payment? The solution is Private Mortgage Insurance or PMI. PMI guards the lender if a borrower defaults on the loan and the market price of the home is less than the balance of the loan.

Because the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and often isn't even tax deductible, PMI is pricey to a borrower. Unlike a piggyback loan where the lender absorbs all the deficits, PMI is advantageous for the lender because they collect the money, and they receive payment if the borrower defaults.


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. A recent appraisal could save you thousands.

How home owners can prevent bearing the expense of PMI

With the passage of The Homeowners Protection Act of 1998, lenders are required to automatically cease the PMI when the principal balance of the loan equals 78 percent of the primary loan amount on most loans. The law pledges that, at the request of the home owner, the PMI must be abandoned when the principal amount equals only 80 percent. So, smart home owners can get off the hook sooner than expected.

It can take a significant number of years to get to the point where the principal is just 80% of the original amount borrowed, so it's necessary to know how your Texas home has appreciated in value. After all, any appreciation you've obtained over time counts towards dismissing PMI. So why should you pay it after your loan balance has dropped below the 80% mark? Even when nationwide trends signify declining home values, realize that real estate is local. Your neighborhood may not be reflecting the national trends and/or your home could have gained equity before things declined.

The difficult thing for most consumers to determine is just when their home's equity goes over the 20% point. A certified, Texas licensed real estate appraiser can surely help. As appraisers, it's our job to keep up with the market dynamics of our area. 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. Faced with information from an appraiser, the mortgage company will generally do away with the PMI with little effort. At that time, the homeowner can delight in the savings from that point on.


The amount you keep from dropping the PMI required when you got your mortgage pays for the appraisal in no time. Nobody is more qualified than Appraisal Professionals, LLC when it comes to appreciating values in Austin and Travis 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