Eliminating Private Mortgage Insurance

While lending institutions have been legally obligated (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) when the balance dips below 78% of the purchase price, they do not have to take similar action if the borrower's equity is more than 22%. (Certain "higher risk" mortgage loans are not included.) But you have the right to cancel PMI yourself (for mortgages made after July 1999) at the point your equity reaches 20 percent, regardless of the original purchase price.

Do your homework

Analyze your statements often. You'll want to keep track of the the purchase prices of the houses that sell in your neighborhood. Unfortunately, if you have a recent mortgage - five years or fewer, you likely haven't had a chance to pay much of the principal: you have been paying mostly interest.

Proof of Equity

Once your equity has reached the magic number of twenty percent, you are just a few steps away from canceling your PMI payments, for the life of your loan. First you will let your lender know that you are requesting to cancel PMI. Next, you will be required to verify that you have at least 20 percent equity. Usually lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your equity and eligibility for PMI cancellation.

Refresh Funding can help find out if you can eliminate your PMI. Give us a call: 305-800-3863.

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