Make Private Mortgage Insurance a Thing of the Past

While lenders have been obligated (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) at the time the balance dips under 78% of the purchase price, they do not have to take similar action if the borrower's equity is more than 22%. (Certain "higher risk" morgages are not included.) However, if your equity gets to 20% (no matter what the original price was), you have the legal right to cancel PMI (for a mortgage that past July 1999).

Do your homework

Familiarize yourself with your loan statements to keep your eye on principal payments. You'll want to stay aware of the prices of the houses that are selling around you. Unfortunately, if yours is a new mortgage loan - five years or fewer, you likely haven't had a chance to pay very much of the principal: you are paying mostly interest.

Verify Equity Amount

You can start the process of PMI cancelation as soon as you're sure your equity has reached 20%. First you will let your lending institution know that you are requesting to cancel your PMI. The lending institution will require documentation that your equity is high enough. Usually lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your equity and eligibility for PMI cancellation.

At Family Mortgage Company of Hawaii, Inc. NMLS #244497, we answer questions about PMI every day. Call us: (808) 935-0678.