Canceling Private Mortgage Insurance

Beginning in 1999, lending institutions have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for loans closed past July of '99) goes down below seventy-eight percent of the price of purchase, but not when the loan's equity climbs to twenty-two percent or higher. (There are some exceptions -like certain "high risk' loans.) The good news is that you can cancel your PMI yourself (for a mortgage that closed after July '99), regardless of the original purchase price, when your equity reaches twenty percent.

Keep a running total of payments

Familiarize yourself with your mortgage statements to keep track of principal payments. Also keep track of how much other homes are selling for in your neighborhood. If your loan is under five years old, chances are you haven't greatly reduced principal � it's been mostly interest.

Verify Equity Amount

Once you find you've reached 20 percent equity, you can begin the process of canceling your Private Mortgage Insurance. You will need to call your lending institution to alert them that you want to cancel PMI. Lenders require proof of eligibility at this point. The best proof there is can be found in a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lenders before canceling PMI.

At Norcal Capital Group, Inc, we answer questions about PMI every day. Give us a call: (650) 689-5684.

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