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

A 20% down payment is usually accepted when purchasing a home. The lender's only risk is often just the remainder between the home value and the balance remaining on the loan, so the 20% supplies a nice cushion against the charges of foreclosure, selling the home again, and regular value variations in the event a purchaser is unable to pay.

The market was taking down payments as low as 10, 5 and often 0 percent in the peak of last decade's mortgage boom. How does a lender manage the additional risk of the low down payment? The solution is Private Mortgage Insurance or PMI. PMI 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.

PMI can be costly to a borrower because the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and on many occasions isn't even tax deductible. It's advantageous for the lender because they collect the money, and they get the money if the borrower defaults, as opposed to a piggyback loan where the lender takes in all the losses.


Is PMI a lineitem in your monthly house payment? Call Appraisal Professionals, LLC today at (512) 627-4017 or send us an e-mail. A recent appraisal could save you thousands.

How homebuyers can refrain from paying PMI

With the implementation of The Homeowners Protection Act of 1998, lenders are obligated to automatically cease the PMI when the principal balance of the loan equals 78 percent of the original loan amount on nearly all loans. The law states that, at the request of the homeowner, the PMI must be abandoned when the principal amount reaches just 80 percent. So, acute homeowners can get off the hook a little early.

It can take many years to reach the point where the principal is only 80% of the original amount of the loan, so it's essential to know how your Texas home has appreciated in value. After all, every bit of appreciation you've accomplished over time counts towards abolishing PMI. So what's the reason for paying it after your loan balance has fallen below the 80% threshold? Your neighborhood might not adhere to national trends and/or your home might have secured equity before things cooled off. So even when nationwide trends signify falling home values, you should understand that real estate is local.

The difficult thing for many homeowners to determine is just when their home's equity rises above the 20% point. A certified, Texas licensed real estate appraiser can surely help. As appraisers, it's our job to understand the market dynamics of our area. At Appraisal Professionals, LLC, we know when property values have risen or declined. We're masters at identifying value trends in Kyle, Hays County, and surrounding areas. When faced with data from an appraiser, the mortgage company will usually cancel the PMI with little trouble. At that time, the homeowner can relish the savings from that point on.


Has your home value appreciated since you first purchased? Call Appraisal Professionals, LLC today at (512) 627-4017. 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