Make Private Mortgage Insurance a Thing of the Past

For loans closed after July 1999, lenders are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan gets below 78 percent of your purchase price � but not when the borrower earns 22 percent equity. (There are some loans that are not included -like some loans considered 'high risk'.) However, if your equity gets to 20% (no matter what the original purchase price was), you have the legal right to cancel PMI (for a loan that after July 1999).

Do your homework

Familiarize yourself with your mortgage statements to keep track of principal payments. You'll want to stay aware of the the purchase amounts of the homes that are selling around you. Unfortunately, if yours is a recent loan - five years or fewer, you likely haven't had a chance to pay a lot of the principal: you are paying mostly interest.

The Proof is in the Appraisal

You can start the process of PMI cancelation at the time you calculate that your equity reaches 20%. You will first let your lending institution know that you are asking to cancel PMI. Your lender will request documentation that your equity is high enough. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will be all the proof you need � and your lender will probably request one before they agree to cancel PMI.

Statewide Funding can help find out if you can eliminate your PMI. Give us a call at (415) 456-7802.

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