Make Private Mortgage Insurance a Thing of the Past

Since 1999, lending institutions have been legally obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for loans made past July of that year) reaches less than seventy-eight percent of the purchase price, but not when the borrower's equity climbs to higher than twenty-two percent. (This law does not apply to a number of higher risk mortgages.) However, you can actually cancel PMI yourself (for mortgages made after July 1999) when your equity reaches 20 percent, regardless of the original purchase price.

Verify the numbers

Keep a running total of each principal payment. You'll want to keep track of the prices of the houses that are selling around you. If your mortgage is under five years old, it's likely you haven't greatly reduced principal � it's been mostly interest.

The Proof is in the Appraisal

You can start the process of PMI cancelation as soon as you're sure your equity has risen to 20%. Contact the lender to request cancellation of your Private Mortgage Insurance. Lending institutions ask for paperwork verifying your eligibility at this point. Most lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your equity and eligibility for PMI cancellation.

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

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