Make Private Mortgage Insurance a Thing of the Past

Beginning in 1999, lending institutions have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for loans closed after July of that year) goes under seventy-eight percent of the price of purchase, but not when the loan's equity reaches twenty-two percent or more. (A number of "higher risk" mortgage loans are not included.) The good news is that you can cancel your PMI yourself (for a loan closing past July '99), regardless of the original price of purchase, when the equity rises to twenty percent.

Do your homework

Analyze your loan statements often. You'll want to stay aware of the the purchase prices of the homes that are selling around you. If your mortgage is fewer than five years old, chances are you haven't greatly reduced principal � you have been paying mostly interest.

The Proof is in the Appraisal

When you determine you have reached 20 percent equity, you can start the process of getting PMI out of your budget. Contact your lender to ask for cancellation of your PMI. Your lender will require documentation that your equity is high enough. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will document your equity amount � and almost all lending institutions will require one before they agree to cancel PMI.

At Custom Lending Group, we answer questions about PMI every day. Give us a call at (707) 252-2700.

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