Make Private Mortgage Insurance a Thing of the Past

Since 1999, lenders have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for a loan made after July of '99) reaches less than seventy-eight percent of the purchase price, but not at the point the borrower's equity climbs to higher than twenty-two percent. (There are some exceptions -like some "high risk' loans.) However, if your equity reaches 20% (regardless of the original price of purchase), you are able to cancel PMI (for a loan that after July 1999).

Verify the numbers

Familiarize yourself with your mortgage statements to keep a running total of principal payments. You'll want to keep track of the the purchase amounts of the homes that are selling in your neighborhood. If your loan is fewer than five years old, it's likely you haven't paid down much principal � you have been paying mostly interest.

Proof of Equity

You can start the process of canceling your PMI when you're sure your equity has reached 20%. Contact your lending institution to ask for cancellation of PMI. Then you will be required to verify that you have at least 20 percent equity. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will be all the proof you need � and your lender will probably require one before they agree to cancel PMI.

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

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