Canceling Private Mortgage Insurance

For loans made after July 1999, lending institutions are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan gets under 78 percent of your purchase amount � but not at the point the borrower achieves 22 percent equity. (The legal obligation does not include some higher risk mortgages.) But if your equity gets to 20% (regardless of the original price of purchase), you can cancel your PMI (for a loan closed after July 1999).

Verify the numbers

Study your statements often. You'll want to keep track of the prices of the houses that sell in your neighborhood. If your loan is under five years old, it's likely you haven't greatly reduced principal � it's been mostly interest.

Verify Eligibility

When you determine you've achieved at least 20 percent equity, you can begin the process of canceling your Private Mortgage Insurance. You will first let your lending institution know that you are asking to cancel PMI. The lending institution will request proof that your equity is high enough. Usually lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your equity and eligibility for PMI cancellation.

At Foxfield Financial, we answer questions about PMI every day. Give us a call at 720-598-8300.

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