Make Private Mortgage Insurance a Thing of the Past

Since 1999, lending institutions have been required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for loans closed past July of '99) goes below seventy-eight percent of the purchase price, but not when the loan's equity gets to over twenty-two percent. (This legal obligation does not apply to a number of higher risk mortgages.) But you can actually cancel PMI yourself (for loans closed past July 1999) at the point your equity gets to 20 percent, without consideration of the original purchase price.

Keep a running total of payments

Familiarize yourself with your mortgage statements to keep a running total of principal payments. You'll want to stay aware of the the purchase amounts of the homes that sell around you. If your loan is under five years old, it's likely you haven't made much progress with the principal � you have paid mostly interest.

The Proof is in the Appraisal

You can start the process of canceling PMI when you're sure your equity has reached 20%. Call your lending institution to ask for cancellation of your Private Mortgage Insurance. Then you will be asked to submit proof that you are eligible to cancel. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will be all the proof you need � and almost all lending institutions require one before they agree to cancel.

At Custom Lending Group, we answer questions about PMI every day. Call us: (707) 252-2700.

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