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

It's generally inferred that a 20% down payment is common when buying a house. The lender's only liability is typically just the difference between the home value and the balance remaining on the loan, so the 20% adds a nice buffer against the expenses of foreclosure, selling the home again, and natural value changes on the chance that a borrower defaults.

The market was working with down payments discounted to 10, 5 and often 0 percent during the mortgage boom of the mid 2000s. A lender is able to handle the additional risk of the low down payment with Private Mortgage Insurance or PMI. This supplemental policy protects the lender if a borrower doesn't pay on the loan and the value of the home is less than the balance of the loan.

PMI is pricey to a borrower because the $40-$50 a month per $100,000 borrowed is rolled into the mortgage payment and often isn't even tax deductible. It's beneficial for the lender because they collect the money, and they receive payment if the borrower is unable to pay, unlike a piggyback loan where the lender consumes all the damages.


The amount you keep from dropping the PMI required when you got your mortgage pays for the appraisal in no time. Capraro Appraisal Company, Inc. has years of experience with value trends in the city of North Providence and Providence County. Contact us today.

How can buyers 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 reaches 78 percent of the primary loan amount on most loans. The law states that, at the request of the home owner, the PMI must be released when the principal amount reaches only 80 percent. So, wise home owners can get off the hook a little earlier.

It can take a significant number of years to get to the point where the principal is only 80% of the original amount borrowed, so it's necessary to know how your Rhode Island home has grown in value. After all, any appreciation you've acquired over the years counts towards dismissing PMI. So why pay it after the balance of your loan has dropped below the 80% threshold? Your neighborhood may not conform to national trends and/or your home could have gained equity before the economy cooled off. So even when nationwide trends signify a reduction in home values, you should realize that real estate is local.

The hardest thing for almost all consumers to determine is just when their home's equity goes over the 20% point. A certified, Rhode Island licensed real estate appraiser can surely help. As appraisers, it's our job to understand 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. When faced with figures from an appraiser, the mortgage company will generally remove the PMI with little trouble. At which time, the home owner can delight in 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 save money by removing 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

 




 
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