Eliminating Private Mortgage Insurance

Beginning in 1999, lending institutions have been legally obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his loan balance (for a loan closed after July of that year) reaches less than seventy-eight percent of the price of purchase, but not at the point the borrower's equity climbs to higher than twenty-two percent. (There are some loans that are excluded -like some loans considered 'high risk'.) The good news is that you can request cancelation of your PMI yourself (for your mortgage that closed past July '99), without considering the original price of purchase, after your equity gets to twenty percent.

Keep a record of payments

Study your monthly statements often. You'll want to keep track of the the purchase prices of the houses that sell in your neighborhood. Unfortunately, if you have a recent loan - five years or under, you probably haven't begun to pay much of the principal: you are paying mostly interest.

Proof of Equity

You can start the process of canceling PMI at the time you're sure your equity reaches 20%. You will first let your lending institution know that you are asking to cancel your 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 canceling PMI.

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

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