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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 largely inferred that a 20% down payment is the standard when buying a house. Considering the liability for the lender is oftentimes only the difference between the home value and the sum outstanding on the loan, the 20% adds a nice cushion against the expenses of foreclosure, reselling the home, and regular value changes in the event a borrower defaults.

During the recent mortgage upturn of the last decade, it was widespread to see lenders only asking for down payments of 10, 5 or sometimes 0 percent. How does a lender endure the added risk of the small down payment? The answer is Private Mortgage Insurance or PMI. This supplementary policy protects the lender in case a borrower doesn't pay on the loan and the value of the house is lower than what is owed on the loan.

Because the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and many times isn't even tax deductible, PMI is pricey to a borrower. Instead of a piggyback loan where the lender takes in all the costs, PMI is lucrative for the lender because they collect the money, and they get paid if the borrower defaults.


Did you secure your mortgage with less than 20% down? Call REID E. CHOATE & ASSOCIATES, LLC today at 808-965-0238. You may be able to get rid of your Private Mortgage Insurance premium.

How can a homeowner keep from bearing the expense of PMI?

The Homeowners Protection Act of 1998 makes the lenders on the majority of loans to automatically eliminate the PMI when the principal balance of the loan equals 78 percent of the initial loan amount. The law stipulates that, at the request of the home owner, the PMI must be abandoned when the principal amount equals only 80 percent. So, savvy homeowners can get off the hook ahead of time.

Because it can take several years to get to the point where the principal is just 80% of the original loan amount, it's crucial to know how your Hawaii home has grown in value. After all, every bit of appreciation you've accomplished over the years counts towards removing PMI. So why should you pay it after the balance of your loan has dropped below the 80% threshold? Even when nationwide trends hint at decreasing home values, realize that real estate is local. Your neighborhood may not be adhering to the national trends and/or your home might have secured equity before things simmered down.

The hardest thing for almost all homeowners to figure out is whether their home equity has exceeded the 20% point. An accredited, Hawaii licensed real estate appraiser can surely help. It is an appraiser's job to know 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. Faced with data from an appraiser, the mortgage company will usually drop the PMI with little anxiety. At that time, the home owner can relish the savings from that point on.


The savings from dropping your PMI pays for 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