Capraro Appraisal Company, Inc. can help you remove your Private Mortgage Insurance

When purchasing a home, a 20% down payment is typically the standard. The lender's only risk is generally just the difference between the home value and the amount remaining on the loan, so the 20% supplies a nice buffer against the expenses of foreclosure, selling the home again, and regular value fluctuations in the event a purchaser doesn't pay.

During the recent mortgage upturn that our country recently experienced, it was customary to see lenders reducing down payments to 10, 5, 3 or even 0 percent. How does a lender handle the additional risk of the small down payment? The answer is Private Mortgage Insurance or PMI. PMI protects the lender in the event a borrower doesn't pay on the loan and the market price of the property is lower than what the borrower still owes on the loan.

Because the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and on many occasions isn't even tax deductible, PMI is pricey to a borrower. It's profitable for the lender because they collect the money, and they receive payment if the borrower defaults, different from a piggyback loan where the lender takes in all the deficits.


The money you keep from cancelling the PMI required when you got your mortgage will make up for the price of the appraisal in a matter of months. Nobody is more qualified than Capraro Appraisal Company, Inc. when it comes to appreciating values in the city of North Providence and Providence County. Contact us today.

How homebuyers can refrain from bearing the cost of PMI

With the implementation of The Homeowners Protection Act of 1998, lenders are obligated to automatically stop the PMI when the principal balance of the loan equals 78 percent of the primary loan amount on most loans. The law pledges that, upon request of the home owner, the PMI must be released when the principal amount equals just 80 percent. So, savvy home owners can get off the hook sooner than expected.

Because it can take a significant number of years to reach the point where the principal is just 80% of the original amount of the loan, it's necessary to know how your Rhode Island home has grown in value. After all, every bit of appreciation you've obtained over the years counts towards abolishing PMI. So why should you pay it after your loan balance has dropped below the 80% threshold? Your neighborhood may not conform to national trends and/or your home might have gained equity before the economy simmered down. So even when nationwide trends hint at declining home values, you should realize that real estate is local.

A certified, Rhode Island 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. As appraisers, it's our job to keep up with the market dynamics of our area. At Capraro Appraisal Company, Inc., we're masters at analyzing value trends in North Providence, Providence County, and surrounding areas, and we know when property values have risen or declined. Faced with figures from an appraiser, the mortgage company will often eliminate the PMI with little trouble. At which time, the homeowner can enjoy 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. You may be able to get rid of your Private Mortgage Insurance payment.

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

 


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