Make Private Mortgage Insurance a Thing of the Past

For loans made since July 1999, lending institutions are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan falls under 78 percent of the purchase price � but not at the point the loan reaches 22 percent equity. (There are some loans that are not included -like some loans considered 'high risk'.) But you have the right to cancel PMI yourself (for mortgage loans made after July 1999) at the point your equity rises to 20 percent, regardless of the original purchase price.

Verify the numbers

Keep track of each principal payment. You'll want to be aware of the the purchase amounts of the houses that are selling around you. If your loan is under five years old, it's likely you haven't paid down much principal � it's been mostly interest.

Verify Equity Amount

You can start the process of canceling PMI when you determine your equity has risen to 20%. You will need to contact the lending institution to alert them that you wish to cancel PMI payments. Lending institutions ask for paperwork verifying your eligibility at this point. The best proof there is can be found in a state certified appraisal using 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: (541) 683-3300.

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