Goodbye, PMI!

Since 1999, lending institutions have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his loan balance (for loans made 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. (This legal obligation does not include a number of higher risk mortgages.) The good news is that you can cancel your PMI yourself (for a mortgage loan closing after July '99), without considering the original price of purchase, once the equity climbs to twenty percent.

Verify the numbers

Review your monthly statements often. Also stay aware of what other homes are selling for in your neighborhood. If your mortgage is fewer than five years old, chances are you haven't made much progress with the principal � you have been paying mostly interest.

The Proof is in the Appraisal

At the point you find you've achieved at least 20 percent equity, you can start the process of freeing yourself from PMI payments. You will need to notify your mortgage lender that you want to cancel PMI. The lending institution will ask for documentation 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), 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. Give us a call at (808) 935-0678.