Goodbye, PMI!

Since 1999, lending institutions have been required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for loans made past July of that year) reaches less than seventy-eight percent of the purchase price, but not at the point the borrower's equity climbs to over twenty-two percent. (There are some loans that are not included -like some "high risk' loans.) However, if your equity gets to 20% (no matter what the original purchase price was), you can cancel your PMI (for a mortgage closed past July 1999).

Verify the numbers

Keep a running total of money going toward the principal. You'll want to be aware of the prices of the houses that are selling in your neighborhood. You've been paying mostly interest if your closing was fewer than 5 years ago, so your principal probably hasn't lowered much.

Proof of Equity

When you determine you've reached 20 percent equity in your home, you can start the process of freeing yourself from PMI payments. First you will tell your lender that you are requesting to cancel your PMI. Lenders ask for proof of eligibility at this point. Most lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your home's equity and eligibility for PMI cancellation.

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

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