Goodbye, PMI!

For loans made after July 1999, lenders are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan gets lower than 78 percent of your purchase amount � but not at the point the loan reaches 22 percent equity. (There are some exceptions -like some "high risk' loans.) However, you can actually cancel PMI yourself (for mortgage loans made past July 1999) once your equity reaches 20 percent, without consideration of the original purchase price.

Verify the numbers

Review your loan statements often. You'll want to keep track of the prices of the houses that are selling around you. Unfortunately, if you have a new loan - five years or under, you probably haven't begun to pay much of the principal: you are paying mostly interest.

Verify Eligibility

Once you determine you have reached 20 percent equity, you can begin the process of canceling your Private Mortgage Insurance. You will first let your lending institution know that you are requesting to cancel PMI. Next, you will be asked to verify that you have at least 20 percent equity. The best proof there is can be found in a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lending institutions before canceling PMI.

Norcal Capital Group, Inc can answer questions about PMI and many others. Give us a call at (650) 689-5684.

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