Eliminating Private Mortgage Insurance

While lending institutions have been legally obligated (for loans closed past July 1999) to cancel Private Mortgage Insurance (PMI) when the mortgage balance goes under 78% of the purchase price, they do not have to take similar action if the borrower's equity is over 22%. (Some "higher risk" loans are excluded.) The good news is that you can request cancelation of your PMI yourself (for your loan that closed after July '99), regardless of the original purchase price, when the equity climbs to twenty percent.

Verify the numbers

Familiarize yourself with your monthly statements to keep a running total of principal payments. You'll want to be aware of the the purchase amounts of the homes that sell in your neighborhood. Unfortunately, if yours is a new loan - five years or under, you likely haven't been able to pay very much of the principal: you are paying mostly interest.

Proof of Equity

Once your equity has risen to the magic number of twenty percent, you are just a few steps away from getting rid of your PMI payments, once and for all. You will first tell your lender that you are asking to cancel your PMI. Lenders request proof of eligibility at this point. The best proof there is can be found in a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), required by most lending institutions before canceling PMI.

U.S.A. Lending, Inc. can answer questions about PMI and many others. Give us a call at 305-967-7200.