Make Private Mortgage Insurance a Thing of the Past

For loans closed after July 1999, lending institutions are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan gets under 78 percent of the purchase amount � but not when the loan reaches 22 percent equity. (There are some exceptions -like some loans considered 'high risk'.) The good news is that you can cancel your PMI yourself (for a mortgage closing past July '99), without considering the original purchase price, after your equity reaches twenty percent.

Do your homework

Familiarize yourself with your monthly statements to keep your eye on principal payments. You'll want to be aware of the the purchase prices of the homes that are selling in your neighborhood. Unfortunately, if yours is a new loan - five years or under, you likely haven't begun to pay very much of the principal: you are paying mostly interest.

Proof of Equity

You can begin the process of PMI cancelation when you're sure your equity has risen to 20%. Call your lender to ask for cancellation of your Private Mortgage Insurance. Lenders ask for paperwork verifying your eligibility at this point. The best proof there is can be found in a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lending institutions before canceling PMI.

Stepping Stone Mortgage can help find out if you can eliminate your PMI. Give us a call at (541) 683-3300.

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