Goodbye, PMI!

Since 1999, lending institutions have been legally obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his loan balance (for a loan closed past July of '99) reaches less than seventy-eight percent of the purchase price, but not when the loan's equity reaches twenty-two percent or more. (The legal obligation does not cover certain higher risk mortgages.) However, you have the right to cancel PMI yourself (for mortgage loans closed after July 1999) when your equity rises to 20 percent, regardless of the original purchase price.

Verify the numbers

Familiarize yourself with your mortgage statements to keep track of principal payments. Also stay aware of the price that other homes are being sold for in your neighborhood. If your loan is under five years old, chances are you haven't paid down much principal � you have paid mostly interest.

The Proof is in the Appraisal

You can begin the process of canceling PMI as soon as you're sure your equity reaches 20%. Call the mortgage lender to ask for cancellation of your PMI. The lending institution will require documentation that your equity is high enough. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will be all the proof you need � and your lender will probably request one before they agree to cancel PMI.

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