Canceling Private Mortgage Insurance

For loans made since July 1999, lending institutions are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance falls under 78 percent of your purchase amount � but not at the point the borrower achieves 22 percent equity. (Some "higher risk" loans are not included.) The good news is that you can request cancelation of your PMI yourself (for your mortgage closing after July '99), without considering the original purchase price, after the equity gets to twenty percent.

Keep a running total of payments

Study your monthly statements often. Pay attention to the purchase prices of other homes in your neighborhood. You've been paying mostly interest if you closed your mortgage fewer than 5 years ago, so your principal most likely hasn't lowered much.

The Proof is in the Appraisal

You can begin the process of PMI cancelation at the time you you think that your equity has reached 20%. You will need to notify your mortgage lender that you want to cancel PMI payments. Then you will be asked to submit proof that you have at least 20 percent equity. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) documents your equity amount � and most lending institutions will require one before they agree to cancel.

Executive Lending Group, LLC can answer questions about PMI and many others. Call us: 8165258000.