Canceling Private Mortgage Insurance

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While lending institutions have been required (for loans closed after July '99) to cancel Private Mortgage Insurance (PMI) when the mortgage balance gets under 78% of the purchase price, they do not have to cancel PMI automatically if the equity is more than 22%. (The legal obligation does not apply to certain higher risk mortgages.) But if your equity gets to 20% (no matter what the original price was), you have the legal right to cancel the PMI (for a loan closed past July 1999).

Verify the numbers

Keep a running total of each principal payment. You'll want to be aware of the the purchase prices of the houses that are selling around you. If your mortgage is under five years old, probably you haven't greatly reduced principal it's been mostly interest.

Verify Eligibility

You can start the process of PMI cancelation when you calculate that your equity has risen to 20%. Call your lender to ask for cancellation of PMI. Then you will be required to submit proof that you have at least 20 percent equity. 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.

California Home Solution can help find out if you can eliminate your PMI. Give us a call at 818 999-6070.