Make Private Mortgage Insurance a Thing of the Past

Beginning in 1999, lending institutions have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for a loan closed past July of '99) goes down below seventy-eight percent of the purchase price, but not at the time the loan's equity gets to higher than twenty-two percent. (Some "higher risk" morgages are excluded.) But if your equity rises to 20% (regardless of the original price of purchase), you have the legal right to cancel the PMI (for a mortgage that after July 1999).

Do your homework

Familiarize yourself with your loan statements to keep track of principal payments. Also stay aware of how much other homes are selling for in your neighborhood. Unfortunately, if you have a recent mortgage - five years or fewer, you probably haven't started to pay very much of the principal: you are paying mostly interest.

The Proof is in the Appraisal

You can start the process of canceling PMI as soon as you're sure your equity has reached 20%. You will need to call the mortgage lender to alert them that you want to cancel PMI. Your lender will ask for documentation that your equity is high enough. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and almost all lending institutions will require one before they agree to cancel PMI.

Tier One Mortgage, LLC can answer questions about PMI and many others. Call us at (585) 282-0960.