Make Private Mortgage Insurance a Thing of the Past

Beginning in 1999, lending institutions have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for a loan closed past July of that year) reaches less than seventy-eight percent of the purchase price, but not when the borrower's equity reaches more than twenty-two percent. (Certain "higher risk" loans are not included.) The good news is that you can cancel your PMI yourself (for your mortgage closing after July '99), regardless of the original purchase price, when your equity gets to twenty percent.

Keep a record of payments

Familiarize yourself with your mortgage statements to keep a running total of principal payments. Also be aware of the price that other homes are purchased for in your neighborhood. You've been paying mostly interest if your closing was fewer than 5 years ago, so your principal most likely hasn't been reduced by much.

Proof of Equity

At the point you think you've achieved at least 20 percent equity in your home, you can begin the process of freeing yourself from PMI payments. You will need to notify your mortgage lender that you wish to cancel PMI payments. Lending institutions ask for paperwork verifying your eligibility at this point. You can get documentation of your equity by getting a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.

MS Investment Mortgage Company can help find out if you can eliminate your PMI. Call us at (858) 485-5800.