Goodbye, PMI!

While lenders have been legally required (for loans closed past July 1999) to cancel Private Mortgage Insurance (PMI) at the time the balance gets below 78% of the purchase price, they do not have to take similar action if the borrower's equity is more than 22%. (Certain "higher risk" loan programs are not included.) But you are able to cancel PMI yourself (for mortgages closed past July 1999) once your equity gets to 20 percent, without consideration of the original price of purchase.

Keep a record of payments

Study your statements often. You'll want to be aware of the the purchase prices of the houses that are selling in your neighborhood. If your mortgage is under five years old, it's likely you haven't made much progress with the principal � it's been mostly interest.

The Proof is in the Appraisal

Once you think you've achieved at least 20 percent equity in your home, you can start the process of getting PMI out of your budget. You will need to call the lending institution to alert them that you wish to cancel PMI payments. Your lender will require documentation that your equity is high enough. 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.

At Norcal Capital Group, Inc, we answer questions about PMI every day. Call us at (650) 689-5684.

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