Canceling Private Mortgage Insurance

Beginning in 1999, lending institutions have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for loans closed after July of that year) reaches less than seventy-eight percent of the price of purchase, but not at the time the borrower's equity gets to more than twenty-two percent. (A number of "higher risk" loan programs are not included.) However, if your equity reaches 20% (no matter what the original price was), you have the legal right to cancel PMI (for a loan that past July 1999).

Keep a running total of payments

Analyze your monthly statements often. Also be aware of how much other homes are purchased for in your neighborhood. Unfortunately, if yours is a new mortgage loan - five years or fewer, you likely haven't been able to pay much of the principal: you have been paying mostly interest.

The Proof is in the Appraisal

Once your equity has risen to the desired twenty percent, you are close to stopping your PMI payments, for the life of your loan. First you will tell your lender that you are requesting to cancel your PMI. Your lender will ask for documentation that your equity is at 20 percent or above. Usually lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your equity and eligibility for canceling PMI.

SLI Mortgage, LLC can answer questions about PMI and many others. Give us a call at (512) 731-8607.

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