Make Private Mortgage Insurance a Thing of the Past

For loans closed after July 1999, lending institutions are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan goes below 78 percent of your purchase amount � but not at the point the loan reaches 22 percent equity. (There are some exceptions -like some loans considered 'high risk'.) But you have the right to cancel PMI yourself (for mortgage loans closed after July 1999) when your equity rises to 20 percent, no matter the original purchase price.

Do your homework

Review your statements often. You'll want to keep track of the the purchase prices of the houses that sell in your neighborhood. You've been paying mostly interest if you closed your mortgage loan fewer than 5 years ago, so your principal most likely hasn't lowered much.

The Proof is in the Appraisal

At the point you find you've reached 20 percent equity in your home, you can begin the process of freeing yourself from PMI payments. You will first let your lender know that you are requesting to cancel PMI. Next, you will be asked to submit documentation that you have at least 20 percent equity. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is all the proof you need � and your lender will probably request one before they'll cancel PMI.

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

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