Eliminating Private Mortgage Insurance

While lending institutions have been legally obligated (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) at the point the balance gets under 78% of the purchase price, they do not have to cancel automatically if the loan's equity is above 22%. (This law does not cover a number of higher risk mortgages.) However, if your equity rises to 20% (no matter what the original price was), you can cancel PMI (for a loan that after July 1999).

Keep track of payments

Analyze your loan statements often. You'll want to keep track of the the purchase prices of the homes that sell in your neighborhood. You've been paying mostly interest if your mortgage loan closed fewer than 5 years ago, so your principal probably hasn't been reduced by much.

The Proof is in the Appraisal

Once your equity has reached the magic number of twenty percent, you are not far away from stopping your PMI payments, once and for all. First you will let your lending institution know that you are requesting to cancel your PMI. Next, you will be asked to verify that you are eligible to cancel. Most lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your equity and eligibility for PMI cancellation.

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

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