Increased North Texas home values could help people drop PMI payments

DALLAS - There may be a silver lining to the property appraisal notice North Texans just got in the mail.

For those people whose value jumped significantly, that could actually save them enough money to cover any tax hike.

Aaron Shockey's new house has all the things many people want: A colossal closet, modern paint colors, and a great location.

But it also has something people don't want.

PMI or private mortgage insurance is a fee tacked on by people’s lender to their mortgage payment each month.

An insurance policy for them in case of default when people don't carry a bunch of equity in their house.

"So if you don’t have 20% equity in your property, sometimes even 22%, you’re going to pay a PMI payment," Shockey explained.

Many people, especially first-time homebuyers who don't put much cash down, pay PMI as much as $125 a month until they've paid down their mortgage.

But Shockey, who is also a realtor, said the market is so hot and prices are climbing so fast that people may already be in a 20% equity position, even if they just bought recently 

"If you bought last summer, I think you might be in an opportunity, depending on how much you put down and where you are located, that you could get PMI knocked off right now," he said.

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Shockey’s street is a perfect example.

One house is being renovated, which will increase the price.

Another is on the market. It’s smaller than his, but listed at a higher price.

Others have been flipped into multi-million dollar homes.

All of them are driving up Shockey's value, even though he just bought it a few weeks ago.

It's the silver lining to the property tax appraisal people just got from the county.

If the proposed value puts them in a 20% equity position, they could save up to four figures a year by dropping PMI, more than enough to pay the tax increase.

"Your lender is not going to keep track of your PMI, and when it falls off, that's more on the consumer themselves," Shockey said.

Here's what people can do. First, check with your lender to see if they require a certain number of PMI payments, regardless of value. If they don't, find the comps in your area to determine your property value, and then order an appraisal.

"Pay $500 for an appraisal or pay $1200 each year. I know what I’m choosing," Shockey said.

If you need some help, Shockey said he'd love to help homeowners get their PMI knocked off.