Make Private Mortgage Insurance a Thing of the Past

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While 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 purchase price, they do not have to cancel PMI automatically if the equity is over 22%. (This law does not cover a number of higher risk mortgages.) The good news is that you can cancel your PMI yourself (for your mortgage loan that closed past July '99), regardless of the original purchase price, at the point the equity reaches twenty percent.

Verify the numbers

Review your statements often. Also be aware of the price that other homes are purchased for in your neighborhood. Unfortunately, if you have a recent mortgage loan - five years or under, you likely haven't been able to pay a lot of the principal: you are paying mostly interest.

The Proof is in the Appraisal

When you think you have reached 20 percent equity, you can begin the process of freeing yourself from PMI payments. You will first let your lending institution know that you are requesting to cancel your PMI. Then you will be asked to submit proof that you are eligible to cancel. You can acquire proof of your home's equity by getting a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lending institutions before canceling PMI.

At clickformyloan.com, we answer questions about PMI every day. Give us a call: 269-282-1612.