Canceling Private Mortgage Insurance

For loans closed after July 1999, lending institutions are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance falls lower than 78 percent of your purchase price � but not when the borrower achieves 22 percent equity. (There are exceptions -like some "high risk' loans.) But if your equity rises to 20% (regardless of the original price of purchase), you have the legal right to cancel your PMI (for a loan that past July 1999).

Do your homework

Keep track of money going toward the principal. Also be aware of the price that other homes are selling for in your neighborhood. You are paying mostly interest if the closing was fewer than 5 years ago, so your principal probably hasn't been reduced by much.

The Proof is in the Appraisal

At the point your equity has reached the required twenty percent, you are close to stopping your PMI payments, once and for all. Call the mortgage lender to request cancellation of PMI. The lending institution will ask for proof that your equity is high enough. Most lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your equity and eligibility for PMI cancellation.

1st Credential Mortgage Inc can help find out if you can eliminate your PMI. Call us at (281) 778-0805.

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