Canceling Private Mortgage Insurance

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Since 1999, lending institutions have been required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for a loan closed past July of '99) reaches less than seventy-eight percent of the purchase price, but not at the point the borrower's equity gets to more than twenty-two percent. (There are some loans that are not covered by this law -like a number of "high risk' loans.) However, you are able to cancel PMI yourself (for loans made past July 1999) once your equity gets to 20 percent, regardless of the original purchase price.

Keep a running total of payments

Keep a running total of each principal payment. Also be aware of the price that other homes are selling for in your neighborhood. If your mortgage is fewer than five years old, it's likely you haven't greatly reduced principal - it's been mostly interest.

Verify Eligibility

As soon as your equity has risen to the desired twenty percent, you are just a few steps away from getting rid of your PMI payments, for the life of your loan. Contact your lender to request cancellation of your PMI. The lending institution will request proof that your equity is at 20 percent or above. Most lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your equity and eligibility for PMI cancellation.

At United Lending LLC, we answer questions about PMI every day. Give us a call at 512-592-5462.