Goodbye, PMI!

Although lenders have been legally required (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) when the loan balance dips below 78% of the purchase price, they do not have to cancel PMI automatically if the borrower's equity is over 22%. (The legal obligation does not include a number of higher risk mortgages.) The good news is that you can cancel your PMI yourself (for a mortgage that closed past July '99), regardless of the original purchase price, when your equity climbs to twenty percent.

Verify the numbers

Familiarize yourself with your loan statements to keep your eye on principal payments. Make yourself aware of the selling prices of other houses in your immediate area. You've been paying mostly interest if your loan closed fewer than 5 years ago, so your principal probably hasn't been reduced by much.

The Proof is in the Appraisal

You can start the process of PMI cancelation at the time you're sure your equity has risen to 20%. You will first let your lending institution know that you are requesting to cancel PMI. Lending institutions ask for documentation verifying your eligibility at this point. Most lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your equity and eligibility for PMI cancellation.

One Source Lending 303-220-7500 can help find out if you can eliminate your PMI. Give us a call at 303-220-7500.