Eliminating Private Mortgage Insurance

Although lenders have been obligated (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) at the time the mortgage balance goes below 78% of the purchase price, they do not have to take similar action if the loan's equity is over 22%. (A number of "higher risk" mortgage loans are not included.) But if your equity reaches 20% (regardless of the original purchase price), you are able to cancel your PMI (for a mortgage loan that past July 1999).

Verify the numbers

Keep track of money going toward the principal. Make yourself aware of the selling prices of other houses in your immediate area. Unfortunately, if you have a recent mortgage loan - five years or fewer, you probably haven't been able to pay a lot of the principal: you have been paying mostly interest.

The Proof is in the Appraisal

At the point your equity has risen to the required twenty percent, you are just a few steps away from getting rid of your PMI payments, for the life of your loan. Call the lender to request cancellation of your Private Mortgage Insurance. The lending institution will request proof that your equity is high enough. Most lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your equity and eligibility for canceling PMI.

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

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