Make Private Mortgage Insurance a Thing of the Past

For loans made since July 1999, lending institutions are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan goes under 78 percent of your purchase amount � but not when the borrower achieves 22 percent equity. (There are exceptions -like a number of "high risk' loans.) The good news is that you can request cancelation of your PMI yourself (for your loan closing past July '99), no matter the original purchase price, when the equity rises to twenty percent.

Verify the numbers

Keep a running total of money going toward the principal. Also be aware of how much other homes are being sold for in your neighborhood. Unfortunately, if yours is a recent mortgage loan - five years or under, you likely haven't started to pay much of the principal: you are paying mostly interest.

The Proof is in the Appraisal

As soon as your equity has reached the desired twenty percent, you are not far away from stopping your PMI payments, once and for all. You will first let your lending institution know that you are requesting to cancel your PMI. Next, you will be required to submit documentation that you are eligible to cancel. 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 PMI cancellation.

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.