Canceling Private Mortgage Insurance

Since 1999, lending institutions have been required to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for a loan closed past July of '99) reaches less than seventy-eight percent of the purchase price, but not at the time the loan's equity climbs to higher than twenty-two percent. (This legal requirment does not apply to some higher risk mortgages.) However, you are able to cancel PMI yourself (for mortgage loans made after July 1999) at the point your equity reaches 20 percent, no matter the original purchase price.

Keep a running total of payments

Familiarize yourself with your monthly statements to keep a running total of principal payments. You'll want to be aware of the prices of the homes that sell around you. You are paying mostly interest if you closed your mortgage fewer than 5 years ago, so your principal probably hasn't lowered much.

The Proof is in the Appraisal

Once you find you have achieved at least 20 percent equity, you can start the process of freeing yourself from PMI payments. First you will let your lender know that you are requesting to cancel your PMI. Lenders ask for proof of eligibility at this point. Most lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your home's equity and eligibility for canceling PMI.

Debbie Oliver NMLS License #248252, America's First Choice Mortgage, NMLS License #279234 can help find out if you can eliminate your PMI. Call us at 214-663-5355.