Canceling Private Mortgage Insurance

Although lenders have been legally obligated (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) at the time the balance gets under 78% of the purchase price, they do not have to cancel automatically if the equity is over 22%. (There are exceptions -like some "high risk' loans.) But you have the right to cancel PMI yourself (for mortgages closed past July 1999) once your equity reaches 20 percent, regardless of the original price of purchase.

Do your homework

Familiarize yourself with your mortgage statements to keep your eye on principal payments. Also keep track of how much other homes are being sold for in your neighborhood. Unfortunately, if yours is a recent mortgage - five years or fewer, you probably haven't started to pay a lot of the principal: you are paying mostly interest.

The Proof is in the Appraisal

Once your equity has risen to the magic number of twenty percent, you are just a few steps away from canceling your PMI payments, for the life of your loan. Contact your lender to ask for cancellation of your PMI. Lending institutions ask for documentation verifying your eligibility at this point. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is all the proof you need � and almost all lenders require one before they agree to cancel PMI.

One Source Lending can answer questions about PMI and many others. Give us a call at 3032207500.