Canceling Private Mortgage Insurance

Since 1999, lending institutions have been required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for a loan closed past July of '99) goes down below seventy-eight percent of the purchase price, but not at the time the loan's equity reaches twenty-two percent or more. (There are exceptions -like some loans considered 'high risk'.) However, you have the right to cancel PMI yourself (for mortgage loans made after July 1999) once your equity reaches 20 percent, without consideration of the original purchase price.

Verify the numbers

Review your statements often. Find out the selling prices of other homes in your neighborhood. Unfortunately, if yours is a recent mortgage loan - five years or under, you probably haven't started to pay a lot of the principal: you are paying mostly interest.

Proof of Equity

Once your equity has reached the desired twenty percent, you are just a few steps away from stopping your PMI payments, for the life of your loan. First you will tell your lender that you are asking to cancel PMI. Then you will be asked to submit proof that you are eligible to cancel. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and your lender will probably request one before they'll cancel PMI.

The Reen Team at American Pacific Mortgage can help find out if you can eliminate your PMI. Give us a call at (408) 626-1879.

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