Canceling Private Mortgage Insurance

Since 1999, lending institutions have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for loans closed after July of that year) goes below seventy-eight percent of the price of purchase, but not when the loan's equity reaches twenty-two percent or higher. (The legal requirment does not apply to certain higher risk mortgages.) The good news is that you can cancel your PMI yourself (for your loan that closed past July '99), without considering the original price of purchase, at the point your equity rises to twenty percent.

Keep track of payments

Keep a running total of your principal payments. You'll want to stay aware of the the purchase prices of the houses that sell around you. Unfortunately, if yours is a new mortgage loan - five years or under, you likely haven't started to pay a lot of the principal: you are paying mostly interest.

The Proof is in the Appraisal

At the point your equity has reached the magic number of twenty percent, you are not far away from stopping your PMI payments, for the life of your loan. First you will notify your lender that you are requesting to cancel PMI. Then you will be asked to submit documentation that you have at least 20 percent equity. Most lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your equity and eligibility for canceling PMI.

At 1st Credential Mortgage Inc, we answer questions about PMI every day. Give us a call at 2817780805.