Eliminating Private Mortgage Insurance

For loans made after July 1999, lenders are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance falls under 78 percent of the purchase price � but not at the point the loan reaches 22 percent equity. (Certain "higher risk" morgages are not included.) However, you can actually cancel PMI yourself (for mortgage loans closed past July 1999) at the point your equity rises to 20 percent, no matter the original price of purchase.

Verify the numbers

Keep track of each principal payment. Find out the purchase prices of other houses in your immediate area. You've been paying mostly interest if the closing was fewer than 5 years ago, so your principal most likely hasn't gone down much.

Verify Equity Amount

At the point you find you've reached 20 percent equity, you can start the process of getting PMI out of your budget. Contact your mortgage lender to ask for cancellation of your PMI. Lenders 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 verify 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. Give us a call: 2146635355.