Goodbye, PMI!

Although lending institutions have been legally required (for loans closed after July '99) to cancel Private Mortgage Insurance (PMI) when the loan balance gets under 78% of the purchase price, they do not have to cancel automatically if the equity is above 22%. (The legal obligation does not apply to a number of higher risk mortgages.) However, if your equity gets to 20% (regardless of the original price of purchase), you can cancel PMI (for a mortgage loan that after July 1999).

Verify the numbers

Keep track of each principal payment. Pay attention to the selling prices of other houses in your immediate area. Unfortunately, if you have a recent mortgage - five years or under, you likely haven't been able to pay very much of the principal: you are paying mostly interest.

Verify Equity Amount

When you determine you have achieved at least 20 percent equity in your home, you can start the process of getting PMI out of your budget. You will need to notify your mortgage lender that you wish to cancel PMI. The lending institution will request proof that your equity is high enough. 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 PMI cancellation.

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