Eliminating Private Mortgage Insurance

Although lending institutions have been required (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) at the time the balance gets below 78% of the purchase price, they do not have to cancel automatically if the borrower's equity is over 22%. (Some "higher risk" loans are excluded.) The good news is that you can request cancelation of your PMI yourself (for a mortgage that closed past July '99), without considering the original purchase price, at the point your equity gets to twenty percent.

Keep a record of payments

Keep track of your principal payments. You'll want to be aware of the prices of the homes that are selling in your neighborhood. You are paying mostly interest if your mortgage loan closed fewer than 5 years ago, so your principal most likely hasn't been reduced by much.

The Proof is in the Appraisal

You can begin the process of PMI cancelation at the time you you think that your equity reaches 20%. You will need to notify your mortgage lender that you want to cancel PMI. The lending institution will require documentation that your equity is at 20 percent or above. Most lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your equity and eligibility for canceling PMI.

At Riviera Funding, we answer questions about PMI every day. Call us at (310) 373-7406.

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