Have equity in your home? Want a lower payment? An appraisal from Capraro Appraisal Company, Inc. can help you get rid of your PMI.

A 20% down payment is typically the standard when getting a mortgage. The lender's risk is usually only the remainder between the home value and the balance remaining on the loan, so the 20% supplies a nice buffer against the costs of foreclosure, reselling the home, and natural value changes in the event a purchaser is unable to pay.

During the recent mortgage upturn of the last decade, it became common to see lenders making deals with down payments of 10, 5 or sometimes 0 percent. How does a lender handle the added risk of the small down payment? The solution is Private Mortgage Insurance or PMI. PMI protects the lender in case a borrower defaults on the loan and the value of the house is less than what is owed on the loan.

Since the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and often isn't even tax deductible, PMI is costly to a borrower. It's profitable for the lender because they collect the money, and they get paid if the borrower defaults, in contrast to a piggyback loan where the lender absorbs all the damages.

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 save money by removing your Private Mortgage Insurance premium.

How can buyers refrain from bearing the expense of PMI?

The Homeowners Protection Act of 1998 makes the lenders on most loans to automatically eliminate the PMI when the principal balance of the loan equals 78 percent of the primary loan amount. The law designates that, at the request of the home owner, the PMI must be abandoned when the principal amount reaches just 80 percent. So, savvy homeowners can get off the hook a little earlier.

It can take a significant number of years to reach the point where the principal is just 80% of the initial amount of the loan, so it's essential to know how your Rhode Island home has appreciated in value. After all, any appreciation you've gained over time counts towards dismissing PMI. So why should you pay it after the balance of your loan has dropped below the 80% mark? Even when nationwide trends predict declining home values, realize that real estate is local. Your neighborhood may not be minding the national trends and/or your home may have acquired equity before things simmered down.

An accredited, Rhode Island licensed real estate appraiser can help home owners figure out if their equity has reached the 20% point, as it's a hard thing to know. It's an appraiser's job to know the market dynamics of their area. At Capraro Appraisal Company, Inc., we know when property values have risen or declined. We're masters at determining value trends in North Providence, Providence County, and surrounding areas. Faced with information from an appraiser, the mortgage company will often remove the PMI with little anxiety. At which time, the homeowner can relish the savings from that point on.

The money you keep from dropping your PMI pays for the appraisal in a matter of months. Capraro Appraisal Company, Inc. are experts when it comes to real estate value trends in North Providence and Providence County. Contact us today.

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