Canceling Private Mortgage Insurance

Beginning in 1999, lending institutions have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for loans made after July of '99) goes beneath seventy-eight percent of the price of purchase, but not when the borrower's equity reaches higher than twenty-two percent. (This law does not cover some higher risk mortgages.) The good news is that you can cancel your PMI yourself (for your loan that closed past July '99), no matter the original price of purchase, when your equity rises to twenty percent.

Keep track of payments

Study your monthly statements often. You'll want to be aware of the prices of the homes that are selling in your neighborhood. Unfortunately, if you have a new loan - five years or fewer, you likely haven't started to pay much of the principal: you have been paying mostly interest.

The Proof is in the Appraisal

When you determine you have reached 20 percent equity, you can start the process of canceling your Private Mortgage Insurance. Contact the mortgage lender to request cancellation of PMI. Lending institutions require proof of eligibility at this point. The best proof there is can be found in a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lending institutions before 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.

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