Canceling Private Mortgage Insurance

Since 1999, lenders have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for a loan closed after July of that year) goes beneath seventy-eight percent of the purchase price, but not at the point the loan's equity climbs to twenty-two percent or higher. (There are exceptions -like some "high risk' loans.) But if your equity rises to 20% (no matter what the original price was), you have the legal right to cancel PMI (for a mortgage that after July 1999).

Keep a record of payments

Study your statements often. You'll want to be aware of the the purchase prices of the homes that are selling around you. If your loan is under five years old, probably you haven't made much progress with the principal � you have been paying mostly interest.

The Proof is in the Appraisal

At the point you determine you have achieved at least 20 percent equity in your home, you can start the process of freeing yourself from PMI payments. Call the mortgage lender to ask for cancellation of your Private Mortgage Insurance. Lending institutions ask for paperwork verifying your eligibility at this point. The best proof there is can be found in a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), required by most lending institutions before canceling PMI.

Nationwide Home Loans can answer questions about PMI and many others. Call us at (562) 693-5048.

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