Canceling Private Mortgage Insurance

For loans closed since July 1999, lenders are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan goes under 78 percent of the purchase amount � but not when the loan reaches 22 percent equity. (The law does not apply to some higher risk mortgages.) The good news is that you can cancel your PMI yourself (for a mortgage that closed after July '99), no matter the original price of purchase, at the point your equity climbs to twenty percent.

Verify the numbers

Analyze your statements often. You'll want to keep track of the the purchase amounts of the houses that sell in your neighborhood. You've been paying mostly interest if your closing was fewer than 5 years ago, so your principal probably hasn't been reduced by much.

Verify Equity Amount

You can begin the process of PMI cancelation at the time you're sure your equity reaches 20%. First you will let your lending institution know that you are asking to cancel PMI. The lending institution will ask for proof that your equity is high enough. The best proof there is can be found in a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), which is 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. Call us: (808) 935-0678.

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