Canceling Private Mortgage Insurance

While lending institutions have been legally obligated (for loans closed past July 1999) to cancel Private Mortgage Insurance (PMI) at the time the loan balance goes under 78% of the purchase price, they do not have to cancel automatically if the equity is more than 22%. (Some "higher risk" loans are excluded.) But if your equity rises to 20% (no matter what the original purchase price was), you have the right to cancel the PMI (for a mortgage loan closed past July 1999).

Verify the numbers

Keep track of your principal payments. You'll want to stay aware of the the purchase amounts of the houses that are selling around you. If your mortgage is under five years old, chances are you haven't paid down much principal � you have paid mostly interest.

The Proof is in the Appraisal

At the point you find you have reached 20 percent equity, you can start the process of getting PMI out of your budget. Contact the lender to request cancellation of your PMI. Lenders ask for paperwork verifying your eligibility at this point. Most lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your home's equity and eligibility for canceling PMI.

Riviera Funding can answer questions about PMI and many others. Call us at (310) 373-7406.

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