Goodbye, PMI!

Although lending institutions have been legally required (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) at the time the balance dips below 78% of the price of purchase, they do not have to cancel PMI automatically if the borrower's equity is more than 22%. (There are some exceptions -like some "high risk' loans.) However, you are able to cancel PMI yourself (for mortgages made past July 1999) when your equity gets to 20 percent, without consideration of the original price of purchase.

Keep a running total of payments

Keep a running total of your principal payments. You'll want to keep track of the the purchase prices of the homes that sell in your neighborhood. If your mortgage is under five years old, it's likely you haven't made much progress with the principal � it's been mostly interest.

The Proof is in the Appraisal

You can begin the process of canceling PMI when you're sure your equity has risen to 20%. You will first tell your lender that you are asking to cancel PMI. Next, you will be required to submit documentation that you are eligible to cancel. Usually lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your home's equity and eligibility for PMI cancellation.

Stepping Stone Mortgage can answer questions about PMI and many others. Give us a call: (541) 683-3300.

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