Make Private Mortgage Insurance a Thing of the Past

Beginning in 1999, lending institutions have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for a loan made past July of '99) reaches less than seventy-eight percent of the price of purchase, but not when the borrower's equity climbs to twenty-two percent or more. (There are some loans that are not included -like some loans considered 'high risk'.) But you have the right to cancel PMI yourself (for mortgage loans made after July 1999) at the point your equity reaches 20 percent, without consideration of the original purchase price.

Verify the numbers

Keep a running total of money going toward the principal. You'll want to be aware of the the purchase amounts of the homes that are selling around you. If your loan is under five years old, chances are you haven't made much progress with the principal � you have paid mostly interest.

Verify Equity Amount

Once your equity has reached the desired twenty percent, you are close to stopping your PMI payments, once and for all. You will first tell your lender that you are requesting to cancel PMI. Lenders ask for documentation verifying your eligibility at this point. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and most lending institutions request one before they agree to cancel 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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