Goodbye, PMI!

Beginning in 1999, lending institutions have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for a loan made after July of '99) goes beneath seventy-eight percent of the purchase price, but not when the loan's equity reaches twenty-two percent or more. (This legal obligation does not include a number of higher risk mortgages.) However, if your equity rises to 20% (regardless of the original purchase price), you have the right to cancel the PMI (for a mortgage loan that past July 1999).

Do your homework

Familiarize yourself with your loan statements to keep a running total of principal payments. Pay attention to the selling prices of other houses in your neighborhood. You've been paying mostly interest if the closing was 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 just a few steps away from getting rid of your PMI payments, once and for all. You will need to notify your mortgage lender that you want to cancel PMI payments. Your lender will require proof that your equity is at 20 percent or above. Most lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your home's equity and eligibility for canceling PMI.

At Tier One Mortgage, LLC, we answer questions about PMI every day. Give us a call at 5852820960.