Make Private Mortgage Insurance a Thing of the Past

Beginning in 1999, lending institutions have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for loans made past July of '99) reaches less than seventy-eight percent of the price of purchase, but not at the time the borrower's equity climbs to over twenty-two percent. (Some "higher risk" loan programs are not included.) However, you are able to cancel PMI yourself (for mortgages closed after July 1999) once your equity rises to 20 percent, regardless of the original purchase price.

Do your homework

Keep track of each principal payment. Also stay aware of how much other homes are selling for in your neighborhood. If your loan is under five years old, it's likely you haven't made much progress with the principal � it's been mostly interest.

Proof of Equity

At the point you determine you have achieved at least 20 percent equity, you can begin the process of freeing yourself from PMI payments. Contact the mortgage lender to ask for cancellation of your PMI. Then you will be asked to verify that you have at least 20 percent equity. Usually lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your equity and eligibility for canceling PMI.

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

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