Make Private Mortgage Insurance a Thing of the Past

Although lending institutions have been legally obligated (for loans closed past July 1999) to cancel Private Mortgage Insurance (PMI) when the loan balance goes below 78% of the price of purchase, they do not have to cancel PMI automatically if the loan's equity is more than 22%. (A number of "higher risk" mortgage loans are not included.) The good news is that you can request cancelation of your PMI yourself (for a loan that closed after July '99), without considering the original purchase price, when your equity rises to twenty percent.

Verify the numbers

Keep track of each principal payment. Find out the selling prices of other houses in your immediate area. You are paying mostly interest if you closed your mortgage fewer than 5 years ago, so your principal most likely hasn't lowered much.

Verify Equity Amount

Once you find you've reached 20 percent equity, you can begin the process of freeing yourself from PMI payments. First you will let your lender know that you are requesting to cancel PMI. The lending institution will request documentation that your equity is at 20 percent or above. Usually 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 canceling PMI.

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

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