Make Private Mortgage Insurance a Thing of the Past

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For loans closed after July 1999, lending institutions are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance gets below 78 percent of your purchase price - but not when the loan reaches 22 percent equity. (This law does not apply to some higher risk mortgages.) The good news is that you can request cancellation of your PMI yourself (for a mortgage that closed after July '99), without considering the original price of purchase, when your equity reaches twenty percent.

Verify the numbers

Familiarize yourself with your monthly statements to keep your eye on principal payments. Also keep track of the price that other homes are being sold for in your neighborhood. You've been paying mostly interest if your loan closed fewer than 5 years ago, so your principal probably hasn't been reduced by much.

Proof of Equity

Once your equity has risen to the required twenty percent, you are close to getting rid of your PMI payments, for the life of your loan. You will need to notify your mortgage lender that you want to cancel PMI. Lenders ask for paperwork verifying your eligibility at this point. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will be all the proof you need - and your lender will probably request one before they'll cancel PMI.

Tier One Mortgage, LLC can help find out if you can eliminate your PMI. Call us: (585) 282-0960.