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.

When purchasing a home, a 20% down payment is usually the standard. Since the risk for the lender is often only the remainder between the home value and the amount due on the loan, the 20% provides a nice cushion against the charges of foreclosure, reselling the home, and typical value variations on the chance that a borrower defaults.

Lenders were taking down payments dropping to 10, 5 and often 0 percent during the mortgage boom of the last decade. A lender is able to manage the added risk of the low down payment with Private Mortgage Insurance or PMI. This supplementary plan covers the lender if a borrower is unable to pay on the loan and the market price of the home is lower than the loan balance.

Because the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and frequently isn't even tax deductible, PMI can be pricey to a borrower. Unlike a piggyback loan where the lender absorbs all the losses, PMI is lucrative for the lender because they acquire the money, and they are covered if the borrower doesn't pay.


The savings from cancelling the PMI required when you got your mortgage 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 can buyers prevent paying PMI?

With the implementation of The Homeowners Protection Act of 1998, lenders are obligated to automatically terminate the PMI when the principal balance of the loan reaches 78 percent of the original loan amount on nearly all loans. The law promises that, upon request of the homeowner, the PMI must be released when the principal amount equals only 80 percent. So, acute homeowners can get off the hook a little early.

It can take several years to arrive at the point where the principal is just 80% of the original loan amount, so it's crucial to know how your Hawaii home has grown in value. After all, any appreciation you've obtained over the years counts towards abolishing PMI. So why should you pay it after your loan balance has dropped below the 80% threshold? Even when nationwide trends indicate decreasing home values, understand that real estate is local. Your neighborhood might not be reflecting the national trends and/or your home might have gained equity before things cooled off.

The difficult thing for most homeowners 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're masters at analyzing value trends in Pahoa, Hawaii County, and surrounding areas, and we know when property values have risen or declined. When faced with information from an appraiser, the mortgage company will often cancel the PMI with little effort. At that time, the homeowner can relish the savings from that point on.


The savings from getting rid of your PMI will make up for the cost of the appraisal in a matter of months. REID E. CHOATE & ASSOCIATES, LLC stays current 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