Make Private Mortgage Insurance a Thing of the Past

Shopping for a mortgage loan? We'd be thrilled to answer your questions about our mortgage offerings! Call us at 510-444-5626. Want to get started? Apply Now.

Beginning in 1999, lenders have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) when his loan balance (for loans closed after July of '99) reaches less than seventy-eight percent of the purchase price, but not when the loan's equity climbs to higher than twenty-two percent. (Some "higher risk" loans are not included.) However, you are able to cancel PMI yourself (for loans made after July 1999) at the point your equity reaches 20 percent, regardless of the original purchase price.

Verify the numbers

Familiarize yourself with your loan statements to keep track of principal payments. You'll want to keep track of the the purchase amounts of the houses that sell around you. Unfortunately, if yours is a new mortgage loan - five years or under, you likely haven't begun to pay very much of the principal: you have been paying mostly interest.

Proof of Equity

You can begin the process of PMI cancellation when you calculate that your equity reaches 20%. First you will let your lender know that you are asking to cancel PMI. The lending institution will ask for documentation that your equity is at 20 percent or above. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is all the proof you need - and almost all lenders request one before they'll cancel PMI.

At The 1st Money Source Inc., we answer questions about PMI every day. Call us at 510-444-5626.