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

It's widely understood that a 20% down payment is common when purchasing a home. Considering the risk for the lender is often only the difference between the home value and the sum due on the loan, the 20% supplies a nice buffer against the expenses of foreclosure, reselling the home, and natural value variations in the event a borrower defaults.

Lenders were accepting down payments dropping to 10, 5 and even 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 answer is Private Mortgage Insurance or PMI. This additional policy protects the lender in case a borrower defaults on the loan and the market price of the home is lower than the loan balance.

Since the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and on many occasions isn't even tax deductible, PMI can be expensive to a borrower. Instead of a piggyback loan where the lender consumes all the deficits, PMI is favorable for the lender because they collect the money, and they are covered if the borrower defaults.


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

How can a home buyer avoid bearing the cost of PMI?

The Homeowners Protection Act of 1998 makes the lenders on the majority of loans to automatically eliminate the PMI when the principal balance of the loan equals 78 percent of the original loan amount. Keen homeowners can get off the hook ahead of time. The law designates that, at the request of the home owner, the PMI must be dropped when the principal amount reaches only 80 percent.

Considering it can take several years to reach the point where the principal is only 80% of the initial amount borrowed, it's necessary to know how your Texas home has appreciated in value. After all, any appreciation you've obtained over the years counts towards abolishing PMI. So why should you pay it after the balance of your loan has dropped below the 80% threshold? Even when nationwide trends predict lower overall home values, be aware that real estate is local. Your neighborhood might not be adhering to the national trends and/or your home may have gained equity before things cooled off.

The hardest thing for most people to figure out is just when their home's equity goes over the 20% point. An accredited, 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 know when property values have risen or declined. We're masters at identifying value trends in Kyle, Hays County, and surrounding areas. Faced with data from an appraiser, the mortgage company will generally eliminate the PMI with little anxiety. At that time, the home owner can relish the savings from that point on.


The money you keep from cancelling your PMI will make up for the price of the appraisal in a matter of months. Nobody is more qualified than Appraisal Professionals, LLC when it comes to appreciating values in Kyle and Hays 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