Make Private Mortgage Insurance a Thing of the Past

Although lenders have been obligated (for loans closed after July '99) to cancel Private Mortgage Insurance (PMI) at the point the loan balance gets below 78% of the price of purchase, they do not have to cancel PMI automatically if the borrower's equity is over 22%. (There are some exceptions -like some loans considered 'high risk'.) But if your equity reaches 20% (no matter what the original price was), you are able to cancel the PMI (for a mortgage loan that past July 1999).

Keep a running total of payments

Study your mortgage statements often. You'll want to be aware of the the purchase amounts of the homes that are selling around you. Unfortunately, if yours is a new mortgage - five years or fewer, you probably haven't begun to pay a lot of the principal: you have been paying mostly interest.

The Proof is in the Appraisal

At the point your equity has risen to the desired twenty percent, you are close to getting rid of your PMI payments, once and for all. You will first let your lender know that you are requesting to cancel PMI. Next, you will be asked 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) is all the proof you need � and your lender will probably request one before they agree to cancel.

At Cal Coast Financial Corp, we answer questions about PMI every day. Call us: (510) 683-9850.

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