Canceling Private Mortgage Insurance

Beginning in 1999, lending institutions have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for loans made past July of that year) goes beneath seventy-eight percent of the price of purchase, but not at the point the borrower's equity climbs to higher than twenty-two percent. (This legal requirment does not apply to certain higher risk mortgages.) However, if your equity rises to 20% (no matter what the original price was), you have the legal right to cancel your PMI (for a loan closed past July 1999).

Keep a record of payments

Study your mortgage statements often. Pay attention to the purchase prices of other homes in your immediate area. You are paying mostly interest if you closed your loan fewer than 5 years ago, so your principal probably hasn't gone down much.

Verify Eligibility

When you determine you've reached 20 percent equity, you can start the process of getting PMI out of your budget. Call the lending institution to request cancellation of PMI. The lending institution will request proof that your equity is high enough. Most lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your home's equity and eligibility for canceling PMI.

Family Mortgage Company of Hawaii, Inc. NMLS #244497 can help find out if you can eliminate your PMI. Give us a call: (808) 935-0678.