Goodbye, PMI!

Beginning in 1999, lending institutions have been required to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for a loan made after July of that year) goes under seventy-eight percent of the price of purchase, but not when the loan's equity reaches over twenty-two percent. (A number of "higher risk" loans are excluded.) But if your equity reaches 20% (regardless of the original price of purchase), you have the legal right to cancel PMI (for a mortgage loan that after July 1999).

Do your homework

Review your statements often. You'll want to keep track of the the purchase amounts of the homes that are selling around you. You've been paying mostly interest if your closing was fewer than 5 years ago, so your principal most likely hasn't lowered much.

The Proof is in the Appraisal

Once your equity has risen to the magic number of twenty percent, you are close to getting rid of your PMI payments, once and for all. You will need to contact your mortgage lender to alert them that you want to cancel PMI. Then you will be required to verify that you have at least 20 percent equity. Most lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your equity and eligibility for PMI cancellation.

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