Let Appraisal Professionals, LLC help you determine if you can cancel your PMI

It's widely known that a 20% down payment is the standard when buying a house. Since the liability for the lender is usually only the remainder between the home value and the sum remaining on the loan, the 20% adds a nice cushion against the expenses of foreclosure, reselling the home, and regular value changes in the event a purchaser is unable to pay.

During the recent mortgage upturn that our country recently experienced, it was widespread to see lenders making deals with down payments of 10, 5 or sometimes 0 percent. How does a lender endure the additional risk of the small down payment? The answer is Private Mortgage Insurance or PMI. This supplemental policy protects the lender in case a borrower is unable to pay on the loan and the value of the house is less than what the borrower still owes on the loan.

PMI is costly to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and oftentimes isn't even tax deductible. It's favorable for the lender because they obtain the money, and they are covered if the borrower is unable to pay, different from a piggyback loan where the lender consumes all the damages.


Did you secure your mortgage with less than 20% down? Call Appraisal Professionals, LLC today at (512) 535-5007 to see if you can save money by removing your Private Mortgage Insurance premium.

How can home owners keep from paying PMI?

With the passage of The Homeowners Protection Act of 1998, lenders are forced to automatically terminate the PMI when the principal balance of the loan reaches 78 percent of the initial loan amount on most loans. The law designates that, upon request of the homeowner, the PMI must be dropped when the principal amount reaches only 80 percent. So, smart home owners can get off the hook a little earlier.

It can take a significant number of years to arrive at the point where the principal is just 80% of the initial amount borrowed, so it's essential to know how your Texas home has increased in value. After all, every bit of appreciation you've gained over the years counts towards abolishing PMI. So what's the reason for paying it after your loan balance has fallen below the 80% threshold? Even when nationwide trends indicate lower overall home values, realize that real estate is local. Your neighborhood may not be adhering to the national trends and/or your home may have gained equity before things cooled off.

An accredited, Texas licensed real estate appraiser can help homeowners figure out just when their home's equity goes over the 20% point, as it's a hard thing to know. It is an appraiser's job to know the market dynamics of their area. At Appraisal Professionals, LLC, we know when property values have risen or declined. We're masters at determining value trends in Austin, Travis County, and surrounding areas. When faced with data from an appraiser, the mortgage company will often do away with the PMI with little anxiety. At that time, the homeowner can enjoy the savings from that point on.


The savings from cancelling the PMI required when you got your mortgage will make up for the cost of 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