Canceling Private Mortgage Insurance

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For loans closed after July 1999, lending institutions are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance gets below 78 percent of your purchase amount but not at the point the loan reaches 22 percent equity. (There are some exceptions -like some loans considered 'high risk'.) The good news is that you can cancel your PMI yourself (for your mortgage loan that closed after July '99), no matter the original price of purchase, at the point the equity gets to twenty percent.

Verify the numbers

Familiarize yourself with your monthly statements to keep a running total of principal payments. Also be aware of what other homes are selling for in your neighborhood. You've been paying mostly interest if your closing was fewer than 5 years ago, so your principal probably hasn't been reduced by much.

The Proof is in the Appraisal

Once you think you've achieved at least 20 percent equity, you can start the process of freeing yourself from PMI payments. You will need to notify your mortgage lender that you want to cancel PMI payments. Next, you will be required to verify that you have at least 20 percent equity. Most lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your home's equity and eligibility for canceling PMI.

Your Loan Officer 4 Life can help find out if you can eliminate your PMI. Call us at 210 286-7267 Mobile.