Canceling Private Mortgage Insurance

Since 1999, lenders have been legally obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for a loan made past July of that year) reaches less than seventy-eight percent of the purchase price, but not at the time the borrower's equity gets to twenty-two percent or higher. (There are some exceptions -like some "high risk' loans.) But you are able to cancel PMI yourself (for loans closed past July 1999) when your equity rises to 20 percent, regardless of the original price of purchase.

Do your homework

Keep a running total of each principal payment. You'll want to keep track of the the purchase amounts of the houses that are selling around you. Unfortunately, if you have a new mortgage - five years or under, you likely haven't begun to pay very much of the principal: you have been paying mostly interest.

Verify Eligibility

When you think you've achieved at least 20 percent equity, you can begin the process of getting PMI out of your budget. You will first notify your lender that you are requesting to cancel your PMI. Lending institutions require paperwork verifying your eligibility at this point. You can get proof of your equity by getting a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lending institutions before canceling PMI.

1st Credential Mortgage Inc can answer questions about PMI and many others. Give us a call at (281) 778-0805.