Canceling Private Mortgage Insurance

Although lending institutions have been obligated (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) at the point the balance gets under 78% of the price of purchase, they do not have to cancel automatically if the borrower's equity is more than 22%. (There are some loans that are excluded -like some "high risk' loans.) However, if your equity gets to 20% (regardless of the original price of purchase), you can cancel PMI (for a mortgage loan that past July 1999).

Do your homework

Familiarize yourself with your monthly statements to keep track of principal payments. Also keep track of the price that other homes are selling for in your neighborhood. Unfortunately, if yours is a recent mortgage - five years or fewer, you probably haven't had a chance to pay much of the principal: you are paying mostly interest.

The Proof is in the Appraisal

As soon as your equity has reached the magic number of twenty percent, you are close to canceling your PMI payments, for the life of your loan. Call the lending institution to request cancellation of your Private Mortgage Insurance. Lenders ask for documentation verifying your eligibility at this point. You can get documentation of your equity by getting a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lending institutions before canceling PMI.

At Tier One Mortgage, LLC, we answer questions about PMI every day. Call us: (585) 282-0960.