Goodbye, PMI!

Beginning in 1999, lenders have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for loans closed past July of that year) goes under seventy-eight percent of the price of purchase, but not at the point the loan's equity gets to more than twenty-two percent. (Certain "higher risk" morgages are not included.) However, you are able to cancel PMI yourself (for loans closed after July 1999) at the point your equity gets to 20 percent, no matter the original price of purchase.

Keep a record of payments

Familiarize yourself with your mortgage statements to keep your eye on principal payments. You'll want to keep track of the the purchase amounts of the homes that sell in your neighborhood. If your mortgage is fewer than five years old, it's likely you haven't paid down much principal � it's been mostly interest.

Verify Eligibility

As soon as your equity has risen to the desired twenty percent, you are close to stopping your PMI payments, once and for all. You will need to notify your mortgage lender that you wish to cancel PMI. Lending institutions ask for paperwork verifying your eligibility at this point. The best proof there is can be found in a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lending institutions before canceling PMI.

Stepping Stone Mortgage can help find out if you can eliminate your PMI. Call us at (541) 683-3300.

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