Goodbye, PMI!

Beginning in 1999, lending institutions have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for loans closed past July of that year) goes down below seventy-eight percent of the purchase price, but not when the loan's equity gets to twenty-two percent or more. (A number of "higher risk" morgages are excluded.) However, you have the right to cancel PMI yourself (for loans made after July 1999) at the point your equity gets to 20 percent, without consideration of the original price of purchase.

Verify the numbers

Familiarize yourself with your monthly statements to keep track of principal payments. You'll want to be aware of the the purchase prices of the houses that sell in your neighborhood. You've been paying mostly interest if your mortgage closed fewer than 5 years ago, so your principal probably hasn't been reduced by much.

Verify Equity Amount

At the point you think you have achieved at least 20 percent equity, you can start the process of canceling your Private Mortgage Insurance. You will first notify your lender that you are asking to cancel PMI. Then you will be asked to submit documentation that you have at least 20 percent equity. You can get proof of your home's equity by getting a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lenders before canceling PMI.

Riviera Funding can answer questions about PMI and many others. Give us a call: (310) 373-7406.

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