Canceling Private Mortgage Insurance

While lenders have been legally required (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) at the point the mortgage balance dips under 78% of the price of purchase, they do not have to take similar action if the loan's equity is above 22%. (The legal requirment does not include a number of higher risk mortgages.) The good news is that you can cancel your PMI yourself (for a mortgage loan closing after July '99), without considering the original purchase price, when your equity gets to twenty percent.

Verify the numbers

Familiarize yourself with your mortgage statements to keep track of principal payments. Also keep track 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 most likely hasn't been reduced by much.

Proof of Equity

At the point your equity has risen to the desired twenty percent, you are just a few steps away from canceling your PMI payments, once and for all. You will need to contact your mortgage lender to let them know that you wish to cancel PMI. Lenders require proof of eligibility at this point. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) verifies your equity amount � and your lender will probably request one before they'll cancel PMI.

Reliance Mortgage Service, Inc can answer questions about PMI and many others. Give us a call: 562 320-0510.

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