Canceling Private Mortgage Insurance

Although lenders have been obligated (for loans closed past July 1999) to cancel Private Mortgage Insurance (PMI) at the point the loan balance gets below 78% of the price of purchase, they do not have to cancel PMI automatically if the loan's equity is more than 22%. (The legal obligation does not include some higher risk mortgages.) The good news is that you can cancel your PMI yourself (for your mortgage loan closing past July '99), no matter the original price of purchase, when the equity climbs to twenty percent.

Verify the numbers

Keep a running total of money going toward the principal. You'll want to keep track of the the purchase amounts of the homes that are selling in your neighborhood. If your loan is under five years old, probably you haven't made much progress with the principal � you have been paying mostly interest.

Proof of Equity

You can begin the process of canceling your PMI when you're sure your equity has risen to 20%. You will first tell your lender that you are asking to cancel your PMI. Lending institutions request documentation verifying your eligibility at this point. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is all the proof you need � and your lender will probably require one before they agree to cancel PMI.

Lighthouse Mortgage Company can help find out if you can eliminate your PMI. Give us a call at (916) 434-8915.

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