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 the standard when purchasing a home. The lender's only exposure is usually just the difference between the home value and the sum outstanding on the loan, so the 20% supplies a nice buffer against the costs of foreclosure, reselling the home, and regular value changes in the event a purchaser defaults.

During the recent mortgage upturn of the mid 2000s, it became common to see lenders reducing down payments to 10, 5 or even 0 percent. A lender is able to handle the increased risk of the minimal down payment with Private Mortgage Insurance or PMI. PMI covers the lender in case a borrower defaults on the loan and the value of the property is less than the loan balance.

PMI can be 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. Separate from a piggyback loan where the lender absorbs all the costs, PMI is profitable for the lender because they secure the money, and they receive payment if the borrower defaults.


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 value trends in the city of Pahoa and Hawaii County. Contact us today.

How can homeowners keep from bearing the cost of PMI?

With the implementation of The Homeowners Protection Act of 1998, lenders are required to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the primary loan amount on most loans. Keen home owners can get off the hook ahead of time. The law designates that, at the request of the homeowner, the PMI must be released when the principal amount equals just 80 percent.

Since it can take many years to reach the point where the principal is just 80% of the original amount borrowed, it's important to know how your Hawaii home has appreciated in value. After all, all of the appreciation you've acquired over the years counts towards abolishing PMI. So what's the reason for paying it after the balance of your loan has fallen below the 80% mark? Your neighborhood might not adhere to national trends and/or your home may have acquired equity before things cooled off. So even when nationwide trends forecast decreasing home values, you should understand that real estate is local.

The hardest thing for many people to figure out is just when their home's equity rises above the 20% point. An accredited, Hawaii licensed real estate appraiser can definitely help. It is 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 masters at recognizing value trends in Pahoa, Hawaii County, and surrounding areas. When faced with figures from an appraiser, the mortgage company will often remove the PMI with little effort. At that time, the home owner can retain the savings from that point on.


The savings from cancelling your PMI will make up for the price of the appraisal in no time. Nobody is more qualified than REID E. CHOATE & ASSOCIATES, LLC when it comes to appreciating values 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