Make Private Mortgage Insurance A Thing Of The Past

Beginning in 1999, lending institutions have been required to cancel a borrower's Private Mortgage Insurance (PMI) when his/her loan balance (for loans closed after July of that year) reaches less than seventy-eight percent of the price of purchase, but not at the time the borrower's equity gets to more than twenty-two percent. (There are some loans that are not covered by this law -like some loans considered 'high risk'.) But you have the right to cancel PMI yourself (for mortgages made past July 1999) when your equity gets to 20 percent, no matter the original purchase price.

Do your homework

Keep a running total of money going toward the principal. You'll want to stay aware of the the purchase prices of the houses that sell in your neighborhood. Unfortunately, if yours is a recent mortgage - five years or fewer, you probably haven't begun to pay very much of the principal: you are paying mostly interest.

Proof of Equity

You can begin the process of PMI cancellation as soon as you you think that your equity has reached 20%. First you will let your lending institution know that you are requesting to cancel your PMI. Next, you will be asked to submit documentation that you have at least 20 percent equity. Usually lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your home's equity and eligibility for PMI cancellation.

At  San Diego's Park Place Financial Group, we answer questions about PMI every day. Give Joe Costa a call: 646-245-7856.