Make Private Mortgage Insurance a Thing of the Past

Beginning in 1999, lenders have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for a loan made after July of that year) reaches less than seventy-eight percent of the purchase price, but not when the loan's equity gets to twenty-two percent or more. (This law does not cover certain higher risk mortgages.) However, if your equity reaches 20% (regardless of the original purchase price), you are able to cancel your PMI (for a loan that past July 1999).

Do your homework

Study your statements often. Also stay aware of how much other homes are being sold for in your neighborhood. Unfortunately, if yours is a recent mortgage loan - five years or fewer, you likely haven't had a chance to pay very much of the principal: you have been paying mostly interest.

Proof of Equity

Once your equity has reached the required twenty percent, you are close to stopping your PMI payments, for the life of your loan. You will need to notify your mortgage lender that you wish to cancel PMI. Then you will be required to submit documentation that you are eligible to cancel. 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 require one before they agree to cancel.

At Stepping Stone Mortgage, we answer questions about PMI every day. Give us a call: (541) 683-3300.

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