Let Capraro Appraisal Company, Inc. help you decide if you can cancel your PMI

It's widely understood that a 20% down payment is common when buying a house. The lender's only risk is usually just the difference between the home value and the balance outstanding on the loan, so the 20% supplies a nice buffer against the expenses of foreclosure, reselling the home, and typical value variations in the event a borrower is unable to pay.

Banks were taking down payments as low as 10, 5 and frequently 0 percent during the mortgage boom of the last decade. A lender is able to manage the increased risk of the reduced down payment with Private Mortgage Insurance or PMI. This added policy protects the lender in the event a borrower is unable to pay on the loan and the market price of the property is lower than what the borrower still owes on the loan.

PMI can be expensive to a borrower because the $40-$50 a month per $100,000 borrowed is lumped into the mortgage monthly payment and many times isn't even tax deductible. It's lucrative for the lender because they secure the money, and they get the money if the borrower doesn't pay, different from a piggyback loan where the lender takes in all the losses.


The savings from cancelling your PMI will make up for the cost of the appraisal in a matter of months. Capraro Appraisal Company, Inc. are experts when it comes to value trends in the city of North Providence and Providence County. Contact us today.

How homeowners can keep from paying 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 reaches 78 percent of the beginning loan amount on nearly all loans. Keen home owners can get off the hook ahead of time. The law pledges that, at the request of the homeowner, the PMI must be abandoned when the principal amount equals only 80 percent.

It can take several years to reach the point where the principal is only 80% of the original loan amount, so it's essential to know how your Rhode Island home has appreciated in value. After all, every bit of appreciation you've acquired over the years counts towards dismissing PMI. So why should you pay it after the balance of your loan has fallen below the 80% mark? Your neighborhood might not follow national trends and/or your home might have gained equity before the economy cooled off. So even when nationwide trends hint at declining home values, you should know most importantly that real estate is local.

The toughest thing for many people to figure out is just when their home's equity goes over the 20% point. A certified, Rhode Island licensed real estate appraiser can certainly help. Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job! At Capraro Appraisal Company, Inc., we're masters at recognizing value trends in North Providence, Providence County, and surrounding areas, and we know when property values have risen or declined. Faced with data from an appraiser, the mortgage company will often do away with the PMI with little anxiety. At that time, the home owner can enjoy the savings from that point on.


Has your home value appreciated since you first purchased? Call Capraro Appraisal Company, Inc. today at (401) 353-5500. You may be able to cancel 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