Canceling Private Mortgage Insurance

For loans closed since July 1999, lending institutions are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan goes lower than 78 percent of the purchase price � but not at the point the loan reaches 22 percent equity. (The legal obligation does not apply to some higher risk mortgages.) The good news is that you can request cancelation of your PMI yourself (for a mortgage loan that closed past July '99), without considering the original price of purchase, after your equity rises to twenty percent.

Keep a record of payments

Keep track of your principal payments. Pay attention to the selling prices of other houses in your neighborhood. If your mortgage is under five years old, it's likely you haven't paid down much principal � you have paid mostly interest.

The Proof is in the Appraisal

Once you think you've achieved at least 20 percent equity in your home, you can begin the process of getting PMI out of your budget. You will need to call the lender to alert them that you want to cancel PMI. Lending institutions ask for proof of eligibility at this point. Most lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your equity and eligibility for PMI cancellation.

Tier One Mortgage, LLC can answer questions about PMI and many others. Give us a call at 5852820960.