Eliminating Private Mortgage Insurance

Although lending institutions have been legally required (for loans closed past July 1999) to cancel Private Mortgage Insurance (PMI) at the time the mortgage balance gets below 78% of the price of purchase, they do not have to cancel PMI automatically if the borrower's equity is more than 22%. (The legal obligation does not include certain higher risk mortgages.) However, if your equity rises to 20% (no matter what the original price was), you have the legal right to cancel PMI (for a mortgage loan that after July 1999).

Do your homework

Familiarize yourself with your mortgage statements to keep your eye on principal payments. Also stay aware of how much other homes are selling for in your neighborhood. Unfortunately, if you have a recent mortgage loan - five years or under, you probably haven't begun to pay a lot of the principal: you are paying mostly interest.

Verify Eligibility

You can begin the process of canceling PMI when you determine your equity has reached 20%. You will first tell your lender that you are requesting to cancel your PMI. Lending institutions ask for proof of eligibility at this point. Usually 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.

At 1st Credential Mortgage Inc, we answer questions about PMI every day. Call us at (281) 778-0805.

Got a Question?

Do you have a question? We can help. Simply fill out the form below and we'll contact you with the answer, with no obligation to you. We guarantee your privacy.

Your Information
Your Question