Goodbye, PMI!

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For loans closed since July 1999, lending institutions are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance falls below 78 percent of the purchase price - but not when the loan reaches 22 percent equity. (There are some loans that are not included -like some loans considered 'high risk'.) 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 closed past July 1999).

Do your homework

Familiarize yourself with your mortgage statements to keep a running total of principal payments. You'll want to stay aware of the the purchase prices of the houses that are selling around you. You are paying mostly interest if your closing was fewer than 5 years ago, so your principal probably hasn't been reduced by much.

Proof of Equity

You can begin the process of canceling PMI at the time you're sure your equity has reached 20%. You will need to contact the mortgage lender to let them know that you wish to cancel PMI payments. Your lender will ask for proof that your equity is at 20 percent or above. You can get proof of your home's equity by getting a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.

Bayport Financial can answer questions about PMI and many others. Give us a call: 909-204-4170.