Goodbye, PMI!

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 borrower's equity climbs to over twenty-two percent. (A number of "higher risk" mortgage loans are not included.) However, you are able to cancel PMI yourself (for mortgages closed past July 1999) at the point your equity reaches 20 percent, regardless of the original price of purchase.

Verify the numbers

Keep a running total of each principal payment. You'll want to be aware of the prices of the houses that sell around you. If your mortgage is under five years old, probably you haven't greatly reduced principal � you have been paying mostly interest.

Verify Eligibility

Once you think you have achieved at least 20 percent equity, you can start the process of canceling your Private Mortgage Insurance. First you will notify your lender that you are asking to cancel PMI. Next, you will be asked 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 most lenders require one before they agree to cancel PMI.

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

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