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Have equity in your home? Want a lower payment? An appraisal from Price Appraisals & Realty, LLC can help you get rid of your PMI.

It's generally known that a 20% down payment is common when getting a mortgage. Since the liability for the lender is generally only the remainder between the home value and the sum remaining on the loan, the 20% supplies a nice buffer against the expenses of foreclosure, selling the home again, and regular value variations in the event a purchaser doesn't pay.

During the recent mortgage upturn of the last decade, it became widespread to see lenders making deals with down payments of 10, 5, 3 or even 0 percent. A lender is able to handle the added risk of the small down payment with Private Mortgage Insurance or PMI. This supplementary policy protects the lender if a borrower doesn't pay on the loan and the market price of the property is less than what is owed on the loan.

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


Does your monthly house payment include a fee PMI? Call Price Appraisals & Realty, LLC today at (512) 799-2642 or send us an e-mail. Documentation of your home's current value could save you thousands.

How can a homebuyer avoid paying PMI?

With the implementation of The Homeowners Protection Act of 1998, lenders are required to automatically cancel the PMI when the principal balance of the loan reaches 78 percent of the initial loan amount on most loans. Keen home owners can get off the hook beforehand. The law stipulates that, at the request of the home owner, the PMI must be abandoned when the principal amount reaches only 80 percent.

Since it can take a significant number of years to reach the point where the principal is just 80% of the initial amount borrowed, it's crucial to know how your Texas home has increased in value. After all, every bit of appreciation you've accomplished over time counts towards abolishing PMI. So why should you pay it after your loan balance has dropped below the 80% mark? Even when nationwide trends forecast lower overall home values, understand that real estate is local. Your neighborhood might not be heeding the national trends and/or your home may have gained equity before things cooled off.

A certified, 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 difficult thing to know. Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job! At Price Appraisals & Realty, LLC, we're experts at pinpointing value trends in Lakeway, Travis County, and surrounding areas, and we know when property values have risen or declined. Faced with figures from an appraiser, the mortgage company will often cancel the PMI with little trouble. At that time, the homeowner can retain the savings from that point on.


Did you secure your mortgage with less than 20% down? Call Price Appraisals & Realty, LLC today at (512) 799-2642. You may be able to get rid of your Private Mortgage Insurance premium.

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