Make Private Mortgage Insurance a Thing of the Past

For loans closed after July 1999, lending institutions are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance goes lower than 78 percent of the purchase amount � but not at the point the loan reaches 22 percent equity. (A number of "higher risk" mortgage loans are excluded.) However, if your equity rises to 20% (no matter what the original purchase price was), you have the right to cancel the PMI (for a mortgage closed after July 1999).

Verify the numbers

Review your monthly statements often. You'll want to stay aware of the the purchase amounts of the homes that sell in your neighborhood. If your loan is under five years old, probably you haven't made much progress with the principal � you have been paying mostly interest.

The Proof is in the Appraisal

When you think you have reached 20 percent equity, you can start the process of getting PMI out of your budget. Contact the mortgage lender to ask for cancellation of your Private Mortgage Insurance. Your lender will ask for documentation that your equity is at 20 percent or above. You can get documentation of your home's equity by getting a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.

Cal Coast Financial Corp can answer questions about PMI and many others. Give us a call: (510) 683-9850.

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