Make Private Mortgage Insurance a Thing of the Past

While lenders have been legally obligated (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) at the point the loan balance dips under 78% of the price of purchase, they do not have to cancel automatically if the borrower's equity is above 22%. (There are some exceptions -like some loans considered 'high risk'.) However, if your equity rises to 20% (no matter what the original purchase price was), you are able to cancel PMI (for a mortgage that after July 1999).

Keep a running total of payments

Study your statements often. Also be aware of the price that other homes are being sold for in your neighborhood. You are paying mostly interest if your mortgage loan closed fewer than 5 years ago, so your principal probably hasn't gone down much.

Verify Eligibility

Once your equity has reached the required twenty percent, you are close to canceling your PMI payments, for the life of your loan. First you will let your lending institution know that you are requesting to cancel PMI. Then you will be required to verify that you have at least 20 percent equity. Most lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your equity and eligibility for PMI cancellation.

At Executive Lending Group, we answer questions about PMI every day. Call us at (405) 615-8543.

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