Eliminating Private Mortgage Insurance

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

Keep a running total of payments

Keep track of money going toward the principal. You'll want to keep track of the prices of the homes that sell around you. Unfortunately, if yours is a recent loan - five years or fewer, you probably haven't started to pay a lot of the principal: you are paying mostly interest.

Proof of Equity

When you think you've achieved at least 20 percent equity in your home, you can start the process of freeing yourself from PMI payments. First you will let your lending institution know that you are asking to cancel your PMI. Lenders require proof of eligibility at this point. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will document your equity amount � and your lender will probably request one before they agree to cancel PMI.

At Executive Lending Group, LLC, we answer questions about PMI every day. Call us: (816) 525-8000 & (81.

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