Make Private Mortgage Insurance a Thing of the Past

Since 1999, lending institutions have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for a loan made after July of that year) reaches less than seventy-eight percent of the purchase price, but not at the point the loan's equity gets to twenty-two percent or higher. (There are exceptions -like a number of "high risk' loans.) But if your equity gets to 20% (no matter what the original purchase price was), you have the right to cancel your PMI (for a mortgage loan closed past July 1999).

Keep a running total of payments

Keep a running total of your principal payments. You'll want to keep track of the the purchase amounts of the houses that sell around you. You are paying mostly interest if your loan closed fewer than 5 years ago, so your principal most likely hasn't gone down much.

Proof of Equity

You can begin the process of canceling your PMI at the time you calculate that your equity has risen to 20%. Call your lending institution to request cancellation of PMI. The lending institution will require proof that your equity is high enough. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will document your equity amount � and your lender will probably request one before they agree to cancel.

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

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