Goodbye, PMI!

For loans closed after July 1999, lending institutions are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan gets lower than 78 percent of the purchase price � but not at the point the loan reaches 22 percent equity. (There are exceptions -like some loans considered 'high risk'.) However, if your equity gets to 20% (regardless of the original purchase price), you have the legal right to cancel your PMI (for a loan closed after July 1999).

Do your homework

Keep a running total of your principal payments. You'll want to stay aware of the the purchase amounts of the houses that sell in your neighborhood. If your loan is under five years old, probably you haven't made much progress with the principal � it's been mostly interest.

The Proof is in the Appraisal

You can start the process of canceling your PMI at the time you're sure your equity has risen to 20%. First you will tell your lender that you are requesting to cancel your PMI. Lending institutions request documentation verifying your eligibility at this point. Most lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your home's equity and eligibility for PMI cancellation.

Family Mortgage Company of Hawaii, Inc. NMLS #244497 can answer questions about PMI and many others. Call us: (808) 935-0678.

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