Let Capraro Appraisal Company, Inc. help you determine if you can eliminate your PMI

A 20% down payment is usually the standard when purchasing a home. Because the liability for the lender is generally only the remainder between the home value and the amount due on the loan, the 20% adds a nice cushion against the charges of foreclosure, reselling the home, and natural value fluctuations in the event a purchaser defaults.

During the recent mortgage boom of the last decade, it was customary to see lenders only asking for down payments of 10, 5 or even 0 percent. A lender is able to manage the added risk of the small down payment with Private Mortgage Insurance or PMI. PMI protects the lender in the event a borrower defaults on the loan and the market price of the home is less than what is owed on the loan.

PMI is pricey to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and often isn't even tax deductible. Instead of a piggyback loan where the lender takes in all the losses, PMI is favorable for the lender because they acquire the money, and they get the money if the borrower defaults.


Did you secure your mortgage with less than 20% down? Contact Capraro Appraisal Company, Inc. today at (401) 353-5500 to see if you can save money by removing your Private Mortgage Insurance premium.

How can buyers keep from paying PMI?

As a result of The Homeowners Protection Act of 1998, lenders are forced to automatically terminate the PMI when the principal balance of the loan reaches 78 percent of the original loan amount on nearly all loans. Savvy homeowners can get off the hook a little earlier. The law designates that, at the request of the homeowner, the PMI must be released when the principal amount equals just 80 percent.

It can take several years to get to the point where the principal is only 80% of the original loan amount, so it's important to know how your Rhode Island home has increased in value. After all, every bit of appreciation you've accomplished over the years counts towards abolishing PMI. So why should you pay it after the balance of your loan has fallen below the 80% mark? Even when nationwide trends signify falling home values, realize that real estate is local. Your neighborhood may not be adopting the national trends and/or your home may have acquired equity before things declined.

A certified, Rhode Island licensed real estate appraiser can help homeowners figure out just when their home's equity rises above the 20% point, as it's a hard thing to know. Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job! At Capraro Appraisal Company, Inc., we know when property values have risen or declined. We're experts at identifying value trends in North Providence, Providence County, and surrounding areas. When faced with information from an appraiser, the mortgage company will most often do away with the PMI with little trouble. At that time, the homeowner can relish the savings from that point on.


Did you secure your mortgage with less than 20% down? Contact Capraro Appraisal Company, Inc. today at (401) 353-5500 to see if you can 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