Canceling Private Mortgage Insurance

Since 1999, lenders have been required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for a loan closed after July of '99) goes down below seventy-eight percent of the price of purchase, but not when the loan's equity reaches twenty-two percent or more. (There are exceptions -like some "high risk' loans.) But if your equity gets to 20% (no matter what the original price was), you can cancel PMI (for a loan closed past July 1999).

Do your homework

Familiarize yourself with your mortgage statements to keep your eye on principal payments. Also be aware of what other homes are purchased for in your neighborhood. Unfortunately, if you have a new mortgage - five years or under, you likely haven't started to pay much of the principal: you are paying mostly interest.

The Proof is in the Appraisal

When you determine you have reached 20 percent equity, you can start the process of getting PMI out of your budget. First you will let your lending institution know that you are requesting to cancel your PMI. Next, you will be asked to verify that you have at least 20 percent equity. The best proof there is can be found in a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lenders before canceling PMI.

Executive Lending Group can answer questions about PMI and many others. Call us: 4056158543.

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Executive Lending Group

A Division of 1st Capital Mortgage LLC

2401 Tee Circle, STE 102B
Norman, OK 73069