Canceling Private Mortgage Insurance

While lending institutions have been legally obligated (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) at the point the mortgage balance gets under 78% of the purchase price, they do not have to cancel automatically if the borrower's equity is above 22%. (Some "higher risk" morgages are not included.) The good news is that you can request cancelation of your PMI yourself (for a loan that closed after July '99), no matter the original price of purchase, once the equity reaches twenty percent.

Keep track of payments

Familiarize yourself with your monthly statements to keep track of principal payments. Find out the purchase prices of other houses in your immediate area. If your mortgage is fewer than five years old, it's likely you haven't greatly reduced principal � you have been paying mostly interest.

Verify Eligibility

You can begin the process of canceling your PMI at the time you you think that your equity has reached 20%. You will need to notify your mortgage lender that you wish to cancel PMI. Lenders require proof of eligibility at this point. You can get proof of your home's equity by getting a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lending institutions before canceling PMI.

At Executive Lending Group, LLC, we answer questions about PMI every day. Give us a call at 8165258000.