Canceling Private Mortgage Insurance

Although lending institutions have been legally required (for loans closed after July '99) to cancel Private Mortgage Insurance (PMI) when the loan balance dips below 78% of the price of purchase, they do not have to take similar action if the borrower's equity is more than 22%. (The legal obligation does not apply to certain higher risk mortgages.) However, if your equity rises to 20% (regardless of the original purchase price), you are able to cancel PMI (for a mortgage loan that after July 1999).

Verify the numbers

Keep track of each principal payment. Also stay aware of what other homes are purchased for in your neighborhood. Unfortunately, if you have a new mortgage - five years or under, you likely haven't been able to pay much of the principal: you are paying mostly interest.

Verify Equity Amount

You can begin the process of canceling PMI when you're sure your equity has risen to 20%. You will need to contact your lending institution to let them know that you want to cancel PMI. Then you will be required to submit proof 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 almost all lenders will require one before they agree to cancel.

U.S.A. Lending, Inc. can help find out if you can eliminate your PMI. Give us a call at 305-967-7200.