Goodbye, PMI!

For loans closed after July 1999, lending institutions are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance falls under 78 percent of the purchase price � but not at the point the loan reaches 22 percent equity. (This legal obligation does not include certain higher risk mortgages.) But you have the right to cancel PMI yourself (for mortgage loans closed past July 1999) when your equity gets to 20 percent, without consideration of the original price of purchase.

Do your homework

Keep a running total of your principal payments. Find out the prices of other houses in your immediate area. Unfortunately, if yours is a recent mortgage - five years or under, you likely haven't had a chance to pay very much of the principal: you have been paying mostly interest.

Verify Equity Amount

You can begin the process of canceling PMI as soon as you determine your equity reaches 20%. You will need to contact the lender to let them know that you want to cancel PMI. Then you will be required to verify that you have at least 20 percent equity. You can get documentation of your home's equity by getting 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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