Make Private Mortgage Insurance a Thing of the Past

Since 1999, lenders have been legally obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his loan balance (for loans made after July of '99) goes under seventy-eight percent of the price of purchase, but not when the loan's equity reaches higher than twenty-two percent. (There are some loans that are not covered by this law -like some loans considered 'high risk'.) However, you have the right to cancel PMI yourself (for mortgages closed past July 1999) once your equity reaches 20 percent, without consideration of the original price of purchase.

Keep track of payments

Study your statements often. Pay attention to the selling prices of other houses in your immediate area. Unfortunately, if you have a recent mortgage loan - five years or fewer, you likely haven't started to pay very much of the principal: you are paying mostly interest.

Proof of Equity

At the point your equity has risen to the desired twenty percent, you are close to stopping your PMI payments, for the life of your loan. Contact your lending institution to ask for cancellation of PMI. Lending institutions ask for proof of eligibility at this point. You can get documentation of your equity by getting a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lenders before canceling PMI.

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