Goodbye, PMI!

Beginning in 1999, lenders have been required to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for a loan made past July of that year) reaches less than seventy-eight percent of the purchase price, but not at the time the borrower's equity gets to more than twenty-two percent. (The legal requirment does not cover certain higher risk mortgages.) The good news is that you can request cancelation of your PMI yourself (for a mortgage loan closing past July '99), regardless of the original price of purchase, once your equity gets to twenty percent.

Verify the numbers

Keep track of your principal payments. Find out the prices of other houses in your immediate area. If your mortgage 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

As soon as your equity has reached the desired twenty percent, you are close to canceling your PMI payments, once and for all. You will need to contact your lending institution to alert them that you want to cancel PMI payments. Next, you will be required to submit documentation that you are eligible to cancel. Usually lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your equity and eligibility for canceling PMI.

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

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