Canceling Private Mortgage Insurance

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Beginning in 1999, lending institutions have been required to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for a loan made past July of '99) goes below seventy-eight percent of the price of purchase, but not when the borrower's equity reaches over twenty-two percent. (There are some loans that are not included -like some loans considered 'high risk'.) The good news is that you can cancel your PMI yourself (for your mortgage that closed past July '99), regardless of the original purchase price, once the equity rises to twenty percent.

Do your homework

Analyze your loan statements often. Also stay aware of how much other homes are selling for in your neighborhood. If your mortgage is fewer than five years old, chances are you haven't paid down much principal - you have been paying mostly interest.

Proof of Equity

Once your equity has risen to the required 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 PMI. Next, you will be required to verify that you have at least 20 percent equity. Usually lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your home's equity and eligibility for PMI cancellation.

Metro Mortgage can answer questions about PMI and many others. Give us a call: 866-300-1550.

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