Canceling Private Mortgage Insurance

For loans made since July 1999, lending institutions are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan goes below 78 percent of your purchase price � but not at the point the borrower achieves 22 percent equity. (Certain "higher risk" mortgage loans are not included.) However, you can actually cancel PMI yourself (for mortgage loans made after July 1999) once your equity rises to 20 percent, regardless of the original purchase price.

Do your homework

Analyze your statements often. Find out the purchase prices of other houses in your immediate area. Unfortunately, if you have a recent loan - five years or under, you likely haven't begun to pay very much of the principal: you have been paying mostly interest.

Proof of Equity

You can start the process of canceling your PMI at the time you you think that your equity has risen to 20%. You will need to call the lender to let them know that you wish to cancel PMI. Your lender will require documentation that your equity is at 20 percent or above. Usually lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your equity and eligibility for PMI cancellation.

Tier One Mortgage, LLC can help find out if you can eliminate your PMI. Give us a call: (585) 282-0960.