Have equity in your home? Want a lower payment? An appraisal from REID E. CHOATE & ASSOCIATES, LLC can help you get rid of your PMI.

It's widely understood that a 20% down payment is accepted when purchasing a home. The lender's only risk is generally just the difference between the home value and the sum due on the loan, so the 20% provides a nice buffer against the charges of foreclosure, selling the home again, and natural value variations on the chance that a purchaser doesn't pay.

During the recent mortgage upturn of the last decade, it became common to see lenders reducing down payments to 10, 5 or often 0 percent. How does a lender handle the added risk of the low down payment? The solution is Private Mortgage Insurance or PMI. This supplementary policy covers the lender if a borrower defaults on the loan and the market price of the house is less than the loan balance.

Since the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and on many occasions isn't even tax deductible, PMI can be expensive to a borrower. Separate from a piggyback loan where the lender takes in all the damages, PMI is money-making for the lender because they obtain the money, and they are covered if the borrower doesn't pay.


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 REID E. CHOATE & ASSOCIATES, LLC when it comes to appreciating values in the city of Pahoa and Hawaii County. Contact us today.

How can a homeowner keep from paying PMI?

With the implementation of The Homeowners Protection Act of 1998, lenders are obligated to automatically cancel the PMI when the principal balance of the loan reaches 78 percent of the primary loan amount on nearly all loans. The law promises that, upon request of the homeowner, the PMI must be abandoned when the principal amount reaches just 80 percent. So, acute home owners can get off the hook ahead of time.

Since it can take several years to arrive at the point where the principal is just 80% of the initial amount borrowed, it's crucial to know how your Hawaii home has grown in value. After all, any appreciation you've achieved over time counts towards removing 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 may have gained equity before things cooled off. So even when nationwide trends predict a reduction in home values, you should realize that real estate is local.

The hardest thing for almost all consumers to determine is whether their home equity has exceeded the 20% point. A certified, Hawaii licensed real estate appraiser can definitely help. Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job! At REID E. CHOATE & ASSOCIATES, LLC, we know when property values have risen or declined. We're masters at pinpointing value trends in Pahoa, Hawaii County, and surrounding areas. When faced with data from an appraiser, the mortgage company will generally remove the PMI with little trouble. At that time, the homeowner can relish the savings from that point on.


Has your real estate appreciated since you first purchased? Contact REID E. CHOATE & ASSOCIATES, LLC today at 808-965-0238 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