Let Capraro Appraisal Company, Inc. help you decide if you can get rid of your PMI

A 20% down payment is usually the standard when buying a house. Because the risk for the lender is usually only the difference between the home value and the amount due on the loan, the 20% adds a nice buffer against the costs of foreclosure, selling the home again, and regular value variations on the chance that a borrower is unable to pay.

During the recent mortgage upturn of the last decade, it was common to see lenders making deals with down payments of 10, 5 or sometimes 0 percent. A lender is able to endure the additional risk of the low down payment with Private Mortgage Insurance or PMI. PMI protects the lender if a borrower doesn't pay on the loan and the market price of the house is lower than the balance of the loan.

PMI is costly to a borrower in that the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and on many occasions isn't even tax deductible. It's profitable for the lender because they acquire the money, and they are covered if the borrower is unable to pay, separate from a piggyback loan where the lender takes in all the damages.


Is PMI a part of your monthly mortgage payment? Call Capraro Appraisal Company, Inc. today at (401) 353-5500 or send us an e-mail. Documentation of your home's present value could save you thousands.

How homebuyers can avoid bearing the expense of PMI

With the implementation of The Homeowners Protection Act of 1998, lenders are forced to automatically terminate the PMI when the principal balance of the loan reaches 78 percent of the primary loan amount on most loans. Savvy home owners can get off the hook beforehand. The law designates that, at the request of the homeowner, the PMI must be released when the principal amount equals only 80 percent.

It can take many years to arrive at the point where the principal is only 80% of the initial amount of the loan, so it's important to know how your Rhode Island home has increased in value. After all, any appreciation you've accomplished over the years counts towards removing PMI. So why should you pay it after your loan balance has dropped below the 80% mark? Your neighborhood might not adhere to national trends and/or your home could have secured equity before things simmered down. So even when nationwide trends hint at decreasing home values, you should know most importantly that real estate is local.

An accredited, Rhode Island licensed real estate appraiser can help homeowners figure out if their equity has reached the 20% point, as it's a tough thing to know. Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job! At Capraro Appraisal Company, Inc., we know when property values have risen or declined. We're masters at analyzing value trends in North Providence, Providence County, and surrounding areas. Faced with information from an appraiser, the mortgage company will most often drop the PMI with little anxiety. At that time, the homeowner can relish the savings from that point on.


The amount you keep from cancelling the PMI required when you got your mortgage will make up for the cost of the appraisal in no time. Nobody is more qualified than Capraro Appraisal Company, Inc. when it comes to appreciating values 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