Canceling Private Mortgage Insurance

For loans closed since July 1999, lending institutions are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance gets below 78 percent of the purchase price � but not at the point the loan reaches 22 percent equity. (Certain "higher risk" morgages are excluded.) But you are able to cancel PMI yourself (for loans closed after July 1999) once your equity reaches 20 percent, without consideration of the original price of purchase.

Verify the numbers

Keep track of each principal payment. Also be aware of the price that other homes are being sold for in your neighborhood. If your mortgage is under five years old, probably you haven't made much progress with the principal � it's been mostly interest.

Verify Equity Amount

At the point your equity has reached the desired twenty percent, you are close to stopping your PMI payments, for the life of your loan. Call the lending institution to request cancellation of PMI. Next, you will be required to verify that you are eligible to cancel. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) documents your equity amount � and most lending institutions will require one before they agree to cancel PMI.

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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