Eliminating Private Mortgage Insurance

Beginning in 1999, lending institutions have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for loans closed past July of that year) goes below seventy-eight percent of the purchase price, but not at the time the borrower's equity climbs to twenty-two percent or higher. (Some "higher risk" loan programs are not included.) However, you have the right to cancel PMI yourself (for mortgage loans made past July 1999) when your equity reaches 20 percent, regardless of the original price of purchase.

Do your homework

Familiarize yourself with your loan statements to keep track of principal payments. Make yourself aware of the prices of other homes in your neighborhood. Unfortunately, if you have a new mortgage loan - five years or under, you likely haven't started to pay a lot of the principal: you have been paying mostly interest.

Proof of Equity

You can begin the process of canceling your PMI as soon as you're sure your equity has reached 20%. You will first tell your lender that you are requesting to cancel your PMI. The lending institution will request documentation that your equity is at 20 percent or above. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and your lender will probably require one before they'll cancel PMI.

Reliance Mortgage Service, Inc can help find out if you can eliminate your PMI. Call us at 562 320-0510.

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