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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.

A 20% down payment is usually the standard when getting a mortgage. The lender's only risk is usually just the remainder between the home value and the amount due on the loan, so the 20% provides a nice buffer against the expenses of foreclosure, reselling the home, and regular value variations in the event a purchaser defaults.

Banks were working with down payments discounted to 10, 5 and even 0 percent during the mortgage boom of the mid 2000s. How does a lender manage the additional risk of the low down payment? The solution is Private Mortgage Insurance or PMI. PMI takes care of the lender in the event a borrower is unable to pay on the loan and the market price of the house is lower than what the borrower still owes on the loan.

Since the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and on many occasions isn't even tax deductible, PMI can be pricey to a borrower. As opposed to a piggyback loan where the lender consumes all the losses, PMI is beneficial for the lender because they secure the money, and they receive payment if the borrower doesn't pay.


The amount you keep from getting rid of your PMI will make up for the price of the appraisal in a matter of months. Nobody is more qualified than Price Appraisals & Realty, LLC when it comes to appreciating values in the city of Lakeway and Travis County. Contact us today.

How can home owners avoid paying PMI?

As a result of The Homeowners Protection Act of 1998, lenders are forced to automatically eliminate the PMI when the principal balance of the loan reaches 78 percent of the initial loan amount on most loans. Acute homeowners can get off the hook ahead of time. The law promises that, at the request of the homeowner, the PMI must be released when the principal amount reaches only 80 percent.

Because it can take several years to reach the point where the principal is only 80% of the initial loan amount, it's essential to know how your Texas home has increased in value. After all, any appreciation you've gained over time counts towards removing PMI. So why pay it after your loan balance has dropped below the 80% threshold? Your neighborhood might not conform to national trends and/or your home could have gained equity before the economy declined. So even when nationwide trends hint at falling home values, you should realize that real estate is local.

An accredited, Texas licensed real estate appraiser can help home owners figure out just when their home's equity goes over the 20% point, as it's a hard thing to know. It's an appraiser's job to understand the market dynamics of their area. At Price Appraisals & Realty, LLC, we know when property values have risen or declined. We're masters at determining value trends in Lakeway, Travis County, and surrounding areas. When faced with information from an appraiser, the mortgage company will most often cancel the PMI with little trouble. At that time, the homeowner can delight in the savings from that point on.


Does your monthly loan payment have a lineitem for 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.

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