Goodbye, PMI!

Since 1999, lenders have been legally obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for loans made past July of '99) reaches less than seventy-eight percent of the purchase price, but not when the loan's equity reaches over twenty-two percent. (This legal obligation does not apply to a number of higher risk mortgages.) But if your equity reaches 20% (regardless of the original price of purchase), you are able to cancel your PMI (for a loan closed after July 1999).

Verify the numbers

Familiarize yourself with your monthly statements to keep a running total of principal payments. You'll want to be aware of the prices of the homes that sell in your neighborhood. Unfortunately, if you have a new mortgage loan - five years or under, you probably haven't begun to pay a lot of the principal: you are paying mostly interest.

The Proof is in the Appraisal

You can start the process of canceling PMI when you're sure your equity has risen to 20%. You will need to notify your mortgage lender that you want to cancel PMI. Lending institutions request proof of eligibility at this point. 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.

Lighthouse Mortgage Company can answer questions about PMI and many others. Call us: (916) 434-8915.

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