Eliminating Private Mortgage Insurance

For loans made since July 1999, lending institutions are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan goes below 78 percent of your purchase price � but not at the point the borrower earns 22 percent equity. (The law does not include certain higher risk mortgages.) But you have the right to cancel PMI yourself (for mortgage loans closed after July 1999) at the point your equity gets to 20 percent, without consideration of the original purchase price.

Verify the numbers

Analyze your mortgage statements often. Find out the prices of other homes in your immediate area. You've been paying mostly interest if your mortgage loan closed fewer than 5 years ago, so your principal probably hasn't been reduced by much.

Proof of Equity

As soon as your equity has risen to the magic number of twenty percent, you are not far away from getting rid of your PMI payments, for the life of your loan. Call your lending institution to ask for cancellation of your Private Mortgage Insurance. Next, you will be required to verify that you are eligible to cancel. Usually lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your equity and eligibility for canceling PMI.

1st Credential Mortgage Inc can help find out if you can eliminate your PMI. Call us: (281) 778-0805.