Canceling Private Mortgage Insurance

Beginning in 1999, lenders have been required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for a loan closed past July of that year) reaches less than seventy-eight percent of the price of purchase, but not at the time the borrower's equity reaches twenty-two percent or higher. (A number of "higher risk" morgages are excluded.) The good news is that you can request cancelation of your PMI yourself (for your mortgage closing after July '99), regardless of the original price of purchase, once your equity reaches twenty percent.

Keep a record of payments

Familiarize yourself with your monthly statements to keep a running total of principal payments. Make yourself aware of the purchase prices of other houses in your neighborhood. Unfortunately, if you have a new mortgage loan - five years or fewer, you probably haven't begun to pay much of the principal: you are paying mostly interest.

Verify Eligibility

When you determine you have achieved at least 20 percent equity in your home, you can start 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 payments. Next, you will be asked to submit documentation that you are eligible to cancel. The best proof there is can be found in a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.

Tier One Mortgage, LLC can answer questions about PMI and many others. Call us: 5852820960.