Canceling Private Mortgage Insurance

While lending institutions have been obligated (for loans closed after July '99) to cancel Private Mortgage Insurance (PMI) at the time the loan balance dips below 78% of the purchase price, they do not have to take similar action if the equity is above 22%. (There are exceptions -like some loans considered 'high risk'.) But if your equity gets to 20% (no matter what the original price was), you can cancel PMI (for a mortgage that after July 1999).

Do your homework

Keep track of your principal payments. Make yourself aware of the selling prices of other houses in your neighborhood. Unfortunately, if yours is a new mortgage loan - five years or under, you probably haven't started to pay much of the principal: you have been paying mostly interest.

The Proof is in the Appraisal

You can start the process of canceling your PMI when you calculate that your equity has risen to 20%. Contact the mortgage lender to ask for cancellation of your PMI. Lenders request paperwork verifying your eligibility at this point. Usually lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your equity and eligibility for canceling PMI.

One Source Lending can help find out if you can eliminate your PMI. Call us at 3032207500.