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.

A 20% down payment is usually accepted when buying a house. The lender's liability is oftentimes only the difference between the home value and the balance outstanding on the loan, so the 20% adds a nice cushion against the charges of foreclosure, reselling the home, and regular value changes on the chance that a purchaser doesn't pay.

The market was accepting down payments as low as 10, 5 and frequently 0 percent in the peak of last decade's mortgage boom. How does a lender handle the additional risk of the small down payment? The solution is Private Mortgage Insurance or PMI. PMI guards the lender in case a borrower defaults on the loan and the market price of the home is less than the loan balance.

PMI is costly to a borrower because 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. Unlike a piggyback loan where the lender absorbs all the costs, PMI is favorable for the lender because they obtain the money, and they get the money if the borrower defaults.


The amount you keep from cancelling your PMI will make up for the cost of the appraisal in a matter of months. 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 homeowners can prevent bearing the cost of PMI

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

Since it can take many years to reach the point where the principal is just 80% of the original amount of the loan, it's necessary to know how your Hawaii home has grown in value. After all, every bit of 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% threshold? Even when nationwide trends forecast decreasing home values, realize that real estate is local. Your neighborhood might not be minding the national trends and/or your home might have acquired equity before things declined.

A certified, Hawaii licensed real estate appraiser can help homeowners figure out if their equity has exceeed the 20% point, as it's a hard thing to know. It's an appraiser's job to understand the market dynamics of their area. At REID E. CHOATE & ASSOCIATES, LLC, we know when property values have risen or declined. We're experts at analyzing value trends in Pahoa, Hawaii County, and surrounding areas. When faced with information from an appraiser, the mortgage company will generally drop the PMI with little trouble. At that time, the home owner can delight in the savings from that point on.


The amount you keep from cancelling the PMI required when you got your mortgage pays for the appraisal in a matter of months. REID E. CHOATE & ASSOCIATES, LLC has years of experience with real estate value trends in Pahoa and Hawaii 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