Canceling Private Mortgage Insurance

Since 1999, lending institutions have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for a loan made after July of that year) goes down below seventy-eight percent of the purchase price, but not when the borrower's equity climbs to over twenty-two percent. (Some "higher risk" mortgage loans are not included.) The good news is that you can request cancelation of your PMI yourself (for a mortgage closing past July '99), without considering the original purchase price, at the point your equity climbs to twenty percent.

Keep track of payments

Familiarize yourself with your loan statements to keep track of principal payments. You'll want to keep track of the the purchase amounts of the houses that are selling around you. You are paying mostly interest if you closed your mortgage loan fewer than 5 years ago, so your principal most likely hasn't been reduced by much.

The Proof is in the Appraisal

You can begin the process of canceling your PMI when you're sure your equity has risen to 20%. You will need to notify your mortgage lender that you wish to cancel PMI payments. Then you will be asked to submit documentation that you have at least 20 percent equity. You can acquire documentation of your home's equity by getting a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lenders before canceling PMI.

At Refresh Funding, we answer questions about PMI every day. Call us at 305-800-3863.

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