Make Private Mortgage Insurance a Thing of the Past

Beginning in 1999, lending institutions have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for loans closed after July of '99) goes down below seventy-eight percent of the purchase price, but not at the time the loan's equity climbs to more than twenty-two percent. (Certain "higher risk" loans are not included.) However, if your equity reaches 20% (no matter what the original price was), you have the legal right to cancel PMI (for a loan that after July 1999).

Keep a record of payments

Familiarize yourself with your monthly statements to keep your eye on principal payments. Find out the selling prices of other homes in your immediate area. If your mortgage is under five years old, it's likely you haven't greatly reduced principal � it's been mostly interest.

Proof of Equity

When you find you've reached 20 percent equity, you can begin the process of getting PMI out of your budget. You will first tell your lender that you are asking to cancel your PMI. Next, you will be asked to submit proof that you are eligible to cancel. Most 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.

Pauline Shah can help find out if you can eliminate your PMI. Call us at 925-895-4155.

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