Eliminating Private Mortgage Insurance

Although lending institutions have been legally obligated (for loans closed after July '99) 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 take similar action if the loan's equity is more than 22%. (Some "higher risk" mortgage loans are excluded.) However, you have the right to cancel PMI yourself (for mortgages closed after July 1999) when your equity gets to 20 percent, without consideration of the original price of purchase.

Keep track of payments

Familiarize yourself with your mortgage statements to keep a running total of principal payments. Make yourself aware of the prices of other houses in your immediate area. Unfortunately, if you have a new loan - five years or fewer, you likely haven't had a chance to pay very much of the principal: you are paying mostly interest.

Verify Eligibility

You can begin the process of PMI cancelation at the time you calculate that your equity reaches 20%. Call the mortgage lender to ask for cancellation of PMI. Then you will be asked to submit proof that you have at least 20 percent equity. Usually lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your equity and eligibility for canceling PMI.

America's Money Source can help find out if you can eliminate your PMI. Give us a call at (407) 898-7559.

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