Have equity in your home? Want a lower payment? An appraisal from Appraisal Professionals, LLC can help you get rid of your PMI.

When buying a house, a 20% down payment is typically the standard. Since the risk for the lender is generally only the remainder between the home value and the amount remaining on the loan, the 20% provides a nice cushion against the charges of foreclosure, reselling the home, and regular value fluctuations in the event a purchaser is unable to pay.

During the recent mortgage upturn of the mid 2000s, it was customary to see lenders reducing down payments to 10, 5, 3 or even 0 percent. A lender is able to manage the additional risk of the low down payment with Private Mortgage Insurance or PMI. PMI guards the lender in case a borrower is unable to pay on the loan and the value of the property is lower than the loan balance.

PMI is costly to a borrower because the $40-$50 a month per $100,000 borrowed is rolled into the mortgage payment and oftentimes isn't even tax deductible. Unlike a piggyback loan where the lender absorbs all the losses, PMI is profitable for the lender because they obtain the money, and they receive payment if the borrower defaults.


Did you have less than 20% to put down on your mortgage? Contact Appraisal Professionals, LLC today at (512) 535-5007 to see if you can cancel your Private Mortgage Insurance premium.

How can a buyer refrain from bearing the expense of PMI?

The Homeowners Protection Act of 1998 makes the lenders on most loans to automatically eliminate the PMI when the principal balance of the loan reaches 78 percent of the original loan amount. Savvy homeowners can get off the hook a little earlier. The law guarantees that, upon request of the home owner, the PMI must be dropped when the principal amount equals just 80 percent.

It can take a significant number of years to arrive at the point where the principal is only 80% of the initial loan amount, so it's essential to know how your Texas home has grown in value. After all, all of the appreciation you've acquired over time counts towards dismissing PMI. So what's the reason for paying it after the balance of your loan has dropped below the 80% threshold? Your neighborhood may not conform to national trends and/or your home could have gained equity before the economy cooled off. So even when nationwide trends predict falling home values, you should realize that real estate is local.

An accredited, Texas licensed real estate appraiser can help home owners figure out if their equity has reached the 20% point, as it's a tough thing to know. It is an appraiser's job to recognize the market dynamics of their area. At Appraisal Professionals, LLC, we're experts at analyzing value trends in Austin, Travis County, and surrounding areas, and we know when property values have risen or declined. When faced with information from an appraiser, the mortgage company will most often drop the PMI with little anxiety. At which time, the home owner can retain the savings from that point on.


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

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