Make Private Mortgage Insurance a Thing of the Past

Beginning in 1999, lending institutions have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for a loan closed past July of '99) reaches less than seventy-eight percent of the price of purchase, but not at the time the loan's equity reaches over twenty-two percent. (There are exceptions -like certain "high risk' loans.) However, you are able to cancel PMI yourself (for loans made past July 1999) once your equity gets to 20 percent, regardless of the original purchase price.

Keep a running total of payments

Familiarize yourself with your monthly statements to keep a running total of principal payments. Pay attention to the selling prices of other homes in your neighborhood. You are paying mostly interest if you closed your loan fewer than 5 years ago, so your principal most likely hasn't been reduced by much.

Proof of Equity

You can begin the process of canceling your PMI at the time you calculate that your equity has reached 20%. You will need to notify your mortgage lender that you want to cancel PMI payments. Your lender will request documentation that your equity is at 20 percent or above. The best proof there is can be found in a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lenders before canceling PMI.

At Tier One Mortgage, LLC, we answer questions about PMI every day. Give us a call at (585) 282-0960.