Eliminating Private Mortgage Insurance

Beginning in 1999, lenders have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for a loan made after July of that year) reaches less than seventy-eight percent of the price of purchase, but not at the time the loan's equity climbs to over twenty-two percent. (A number of "higher risk" loan programs are excluded.) The good news is that you can cancel your PMI yourself (for your loan that closed past July '99), no matter the original purchase price, when your equity reaches twenty percent.

Do your homework

Familiarize yourself with your mortgage statements to keep a running total of principal payments. Also keep track of how much other homes are purchased for in your neighborhood. Unfortunately, if yours is a recent loan - five years or fewer, you likely haven't started to pay a lot of the principal: you have been paying mostly interest.

Proof of Equity

Once your equity has risen to the required twenty percent, you are close to stopping your PMI payments, for the life of your loan. Contact the lender to ask for cancellation of your Private Mortgage Insurance. Lending institutions require proof of eligibility at this point. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will document your equity amount � and most lenders require one before they'll cancel PMI.

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