Let Patterson Appraisal Service help you figure out if you can eliminate your PMI

A 20% down payment is usually the standard when buying a house. Considering the liability for the lender is often only the difference between the home value and the amount due on the loan, the 20% provides a nice buffer against the costs of foreclosure, selling the home again, and regular value variations in the event a purchaser is unable to pay.

The market was taking down payments dropping to 10, 5 and often 0 percent during the mortgage boom of the mid 2000s. How does a lender endure the added risk of the small down payment? The solution is Private Mortgage Insurance or PMI. PMI covers the lender in case a borrower is unable to pay on the loan and the market price of the house is less than the balance of the loan.

PMI can be expensive to a borrower in that the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and frequently isn't even tax deductible. It's advantageous for the lender because they collect the money, and they get the money if the borrower doesn't pay, in contrast to a piggyback loan where the lender consumes all the costs.


	Does your monthly loan payment include a fee PMI? Call Patterson Appraisal Service today at 361-575-8888 or send us an e-mail. Documentation of your home's current value could save you thousands.

How can a home buyer avoid paying PMI?

The Homeowners Protection Act of 1998 obligates the lenders on the majority of loans to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the original loan amount. The law stipulates that, upon request of the home owner, the PMI must be released when the principal amount equals only 80 percent. So, smart homeowners can get off the hook ahead of time.

It can take several years to get to the point where the principal is just 80% of the initial amount of the loan, so it's essential to know how your Texas home has appreciated in value. After all, all of the appreciation you've accomplished over the years counts towards abolishing PMI. So what's the reason for paying it after the balance of your loan has dropped below the 80% mark? Even when nationwide trends indicate decreasing home values, understand that real estate is local. Your neighborhood might not be minding the national trends and/or your home might have gained equity before things cooled off.

The toughest thing for many homeowners to determine is whether their home equity has exceeded the 20% point. An accredited, Texas licensed real estate appraiser can definitely help. As appraisers, it's our job to know the market dynamics of our area. At Patterson Appraisal Service, we know when property values have risen or declined. We're masters at identifying value trends in Victoria, Victoria County, and surrounding areas. Faced with figures from an appraiser, the mortgage company will often cancel the PMI with little effort. At which time, the home owner can retain the savings from that point on.


	The amount you keep from getting rid of your PMI will make up for the cost of the appraisal in a matter of months. Nobody is more qualified than Patterson Appraisal Service when it comes to appreciating values in Victoria and Victoria 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