Canceling Private Mortgage Insurance

Since 1999, lending institutions have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for loans made after July of '99) goes under seventy-eight percent of the price of purchase, but not when the borrower's equity gets to twenty-two percent or higher. (Some "higher risk" morgages are excluded.) The good news is that you can request cancelation of your PMI yourself (for a loan closing after July '99), regardless of the original price of purchase, once the equity gets to twenty percent.

Do your homework

Review your statements often. You'll want to be aware of the the purchase prices of the homes that sell in your neighborhood. If your loan is fewer than five years old, probably you haven't greatly reduced principal � you have been paying mostly interest.

Proof of Equity

At the point you find you've achieved at least 20 percent equity, you can begin the process of canceling your Private Mortgage Insurance. You will first let your lender know that you are requesting to cancel PMI. Then you will be asked to verify that you are eligible to cancel. The best proof there is can be found in a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.

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

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