Make Private Mortgage Insurance a Thing of the Past

Beginning in 1999, lenders have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for loans closed past July of '99) goes below seventy-eight percent of the price of purchase, but not at the time the loan's equity gets to over twenty-two percent. (Certain "higher risk" loan programs are excluded.) The good news is that you can request cancelation of your PMI yourself (for your loan that closed after July '99), regardless of the original price of purchase, after your equity climbs to twenty percent.

Verify the numbers

Keep track of each principal payment. Make yourself aware of the selling prices of other homes in your neighborhood. Unfortunately, if yours is a new mortgage loan - five years or under, you likely haven't begun to pay very much of the principal: you are paying mostly interest.

The Proof is in the Appraisal

You can start the process of PMI cancelation as soon as you calculate that your equity has risen to 20%. You will need to notify your mortgage lender that you wish to cancel PMI. Lending institutions ask for documentation verifying your eligibility at this point. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will be all the proof you need � and your lender will probably request one before they agree to cancel PMI.

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

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