Canceling Private Mortgage Insurance

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Since 1999, lending institutions have been legally obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for loans made past July of that year) reaches less than seventy-eight percent of the purchase price, but not at the time the borrower's equity gets to twenty-two percent or higher. (There are some exceptions -like a number of "high risk' loans.) However, you are able to cancel PMI yourself (for mortgages closed past July 1999) when your equity gets to 20 percent, regardless of the original price of purchase.

Do your homework

Analyze your mortgage statements often. You'll want to keep track of the the purchase amounts of the houses that sell in your neighborhood. You've been paying mostly interest if your mortgage closed fewer than 5 years ago, so your principal probably hasn't been reduced by much.

Verify Eligibility

Once you determine you've achieved at least 20 percent equity, you can begin the process of freeing yourself from PMI payments. Contact your lender to ask for cancellation of PMI. The lending institution will require documentation that your equity is at 20 percent or above. Usually lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your equity and eligibility for canceling PMI.

At VITEK MORTGAGE GROUP, we answer questions about PMI every day. Call us: 800-530-9421.