Eliminating Private Mortgage Insurance

Beginning in 1999, lenders have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for loans closed after July of '99) goes under seventy-eight percent of the price of purchase, but not when the borrower's equity reaches twenty-two percent or higher. (Some "higher risk" loan programs are not included.) But if your equity rises to 20% (regardless of the original price of purchase), you have the right to cancel PMI (for a mortgage loan that past July 1999).

Do your homework

Keep track of your principal payments. Also stay aware of how much other homes are selling for in your neighborhood. Unfortunately, if yours is a recent loan - five years or under, you likely haven't been able to pay very much of the principal: you have been paying mostly interest.

Verify Eligibility

Once you think you have achieved at least 20 percent equity in your home, you can begin the process of getting PMI out of your budget. You will first let your lending institution know that you are requesting to cancel PMI. Lending institutions require documentation verifying your eligibility at this point. Usually 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.

ADVISORY MORTGAGE can help find out if you can eliminate your PMI. Give us a call at 8102292820.