Canceling Private Mortgage Insurance

Beginning in 1999, lenders have been legally obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for loans closed after July of '99) reaches less than seventy-eight percent of the price of purchase, but not when the borrower's equity gets to higher than twenty-two percent. (There are some loans that are not covered by this law -like certain "high risk' loans.) But you can actually cancel PMI yourself (for mortgages made after July 1999) at the point your equity rises to 20 percent, regardless of the original price of purchase.

Keep track of payments

Keep a running total of money going toward the principal. Pay attention to the selling prices of other homes in your neighborhood. Unfortunately, if yours is a new mortgage loan - five years or fewer, you probably haven't started to pay a lot of the principal: you are paying mostly interest.

Proof of Equity

Once your equity has risen to the required twenty percent, you are close to stopping your PMI payments, once and for all. You will need to notify your mortgage lender that you want to cancel PMI payments. Lenders require proof of eligibility at this point. Usually lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your equity and eligibility for canceling PMI.

At Family Mortgage Company of Hawaii, Inc. NMLS #244497, we answer questions about PMI every day. Call us: (808) 935-0678.