Eliminating Private Mortgage Insurance

For loans closed after July 1999, lenders are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan goes under 78 percent of the purchase price � but not when the borrower achieves 22 percent equity. (There are some exceptions -like certain "high risk' loans.) The good news is that you can request cancelation of your PMI yourself (for your mortgage loan closing after July '99), without considering the original price of purchase, at the point the equity climbs to twenty percent.

Do your homework

Keep a running total of money going toward the principal. You'll want to keep track of the prices of the houses that sell around you. If your mortgage is fewer than five years old, chances are you haven't greatly reduced principal � you have paid mostly interest.

Verify Equity Amount

At the point your equity has reached the required twenty percent, you are not far away from canceling your PMI payments, once and for all. Call your lender to request cancellation of PMI. Lending institutions ask for proof of eligibility at this point. Usually lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your home's equity and eligibility for PMI cancellation.

The Reen Team at American Pacific Mortgage can answer questions about PMI and many others. Call us at (408) 626-1879.

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