Eliminating Private Mortgage Insurance

For loans closed after July 1999, lending institutions are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance gets under 78 percent of your purchase price � but not when the loan reaches 22 percent equity. (There are some loans that are excluded -like some loans considered 'high risk'.) However, you are able to cancel PMI yourself (for loans closed after July 1999) at the point your equity reaches 20 percent, regardless of the original price of purchase.

Keep track of payments

Analyze your monthly statements often. Also keep track of the price that other homes are being sold for in your neighborhood. You've been paying mostly interest if you closed your loan fewer than 5 years ago, so your principal probably hasn't gone down much.

The Proof is in the Appraisal

At the point your equity has risen to the magic number of twenty percent, you are just a few steps away from canceling your PMI payments, once and for all. You will need to notify your mortgage lender that you want to cancel PMI payments. Your lender will request proof that your equity is high enough. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is all the proof you need � and almost all lending institutions request one before they agree to cancel PMI.

MS Investment Mortgage Company can answer questions about PMI and many others. Give us a call at (858) 485-5800.