Make Private Mortgage Insurance a Thing of the Past

While lenders have been legally required (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) at the time the mortgage balance gets below 78% of the purchase price, they do not have to cancel automatically if the loan's equity is more than 22%. (Certain "higher risk" loan programs are excluded.) However, you can actually cancel PMI yourself (for mortgages made past July 1999) when your equity rises to 20 percent, regardless of the original price of purchase.

Do your homework

Familiarize yourself with your monthly statements to keep a running total of principal payments. You'll want to stay aware of the the purchase amounts of the houses that are selling around you. Unfortunately, if you have a recent mortgage loan - five years or under, you probably haven't begun to pay a lot of the principal: you have been paying mostly interest.

Verify Eligibility

When you think you've reached 20 percent equity, you can begin the process of freeing yourself from PMI payments. Call your lender to request cancellation of PMI. Next, you will be asked to submit documentation that you are eligible to cancel. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) documents your equity amount � and almost all lenders require one before they'll cancel PMI.

Custom Lending Group can answer questions about PMI and many others. Call us at (707) 252-2700.

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