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

When purchasing a home, a 20% down payment is typically the standard. Since the risk for the lender is oftentimes only the difference between the home value and the amount due on the loan, the 20% supplies a nice buffer against the expenses of foreclosure, reselling the home, and natural value variations on the chance that a borrower is unable to pay.

During the recent mortgage boom that our country recently experienced, it was common to see lenders reducing down payments to 10, 5, 3 or often 0 percent. A lender is able to endure the added risk of the minimal down payment with Private Mortgage Insurance or PMI. This added plan covers the lender in case a borrower is unable to pay on the loan and the market price of the home is less than the balance of the loan.

PMI is pricey to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage monthly payment and frequently isn't even tax deductible. Instead of a piggyback loan where the lender takes in all the damages, PMI is profitable for the lender because they collect the money, and they are covered if the borrower defaults.


Did you have less than 20% to put down on your mortgage? Contact Capraro Appraisal Company, Inc. today at (401) 353-5500. You may be able to cancel your Private Mortgage Insurance premium.

How home owners can avoid paying PMI

With the passage of The Homeowners Protection Act of 1998, lenders are required to automatically stop the PMI when the principal balance of the loan reaches 78 percent of the primary loan amount on nearly all loans. Smart homeowners can get off the hook a little earlier. The law pledges that, upon request of the homeowner, the PMI must be released when the principal amount equals only 80 percent.

It can take several years to arrive at the point where the principal is just 80% of the initial loan amount, so it's necessary to know how your Rhode Island home has appreciated 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 predict decreasing home values, understand that real estate is local. Your neighborhood might not be heeding the national trends and/or your home might have gained equity before things simmered down.

A certified, Rhode Island licensed real estate appraiser can help homeowners figure out if their equity has made it to the 20% point, as it's a difficult thing to know. As appraisers, it's our job to recognize the market dynamics of our area. At Capraro Appraisal Company, Inc., we know when property values have risen or declined. We're masters at pinpointing value trends in North Providence, Providence County, and surrounding areas. Faced with information from an appraiser, the mortgage company will usually drop the PMI with little effort. At that time, the home owner can delight in the savings from that point on.


Is PMI a part of your monthly house payment? Call Capraro Appraisal Company, Inc. today at (401) 353-5500 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