Make Private Mortgage Insurance a Thing of the Past

Although lenders have been legally obligated (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) at the point the balance gets under 78% of the purchase price, they do not have to cancel automatically if the loan's equity is more than 22%. (The legal obligation does not cover a number of higher risk mortgages.) The good news is that you can request cancelation of your PMI yourself (for a loan closing past July '99), without considering the original price of purchase, after your equity gets to twenty percent.

Do your homework

Analyze your statements often. Also stay aware of what other homes are selling for in your neighborhood. Unfortunately, if yours is a new mortgage loan - five years or under, you likely haven't been able to pay very much of the principal: you are paying mostly interest.

Verify Equity Amount

At the point your equity has risen to the magic number of twenty percent, you are not far away from canceling your PMI payments, for the life of your loan. First you will notify your lender that you are requesting to cancel your PMI. Your lender will request proof that your equity is high enough. You can acquire documentation of your equity by getting a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lenders before canceling PMI.

The Mortgage Exchange Service LLC can answer questions about PMI and many others. Call us at 703.255-5810.

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