Make Private Mortgage Insurance a Thing of the Past

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For loans closed after July 1999, lending institutions are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance goes under 78 percent of the purchase amount - but not at the point the borrower achieves 22 percent equity. (Certain "higher risk" mortgage loans are not included.) The good news is that you can cancel your PMI yourself (for a loan that closed past July '99), regardless of the original price of purchase, when your equity reaches twenty percent.

Keep a record of payments

Familiarize yourself with your monthly statements to keep a running total of principal payments. Also be aware of how much other homes are purchased for in your neighborhood. Unfortunately, if you have a new mortgage - five years or under, you likely haven't been able to pay much of the principal: you have been paying mostly interest.

Proof of Equity

You can start the process of PMI cancellation at the time you're sure your equity has reached 20%. You will first let your lending institution know that you are requesting to cancel your PMI. The lending institution will ask for proof that your equity is at 20 percent or above. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will be all the proof you need - and almost all lenders will require one before they agree to cancel PMI.

Sierra View Financial Corp can help find out if you can eliminate your PMI. Give us a call: 916-989-6222.