Make Private Mortgage Insurance a Thing of the Past

Although lenders have been legally obligated (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) at the time the balance goes under 78% of the price of purchase, they do not have to cancel automatically if the borrower's equity is above 22%. (The legal obligation does not include certain higher risk mortgages.) However, you can actually cancel PMI yourself (for loans closed after July 1999) once your equity gets to 20 percent, without consideration of the original purchase price.

Verify the numbers

Keep a running total of each principal payment. Also stay aware of how much other homes are selling for in your neighborhood. You've been paying mostly interest if you closed your mortgage loan fewer than 5 years ago, so your principal most likely hasn't been reduced by much.

The Proof is in the Appraisal

At the point you find you've reached 20 percent equity in your home, you can begin the process of freeing yourself from PMI payments. Call your mortgage lender to ask for cancellation of your PMI. The lending institution will ask for proof that your equity is high enough. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will be all the proof you need � and almost all lending institutions will require one before they'll cancel PMI.

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