Make Private Mortgage Insurance a Thing of the Past

Since 1999, lending institutions have been legally obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his loan balance (for a loan closed past July of '99) goes down below seventy-eight percent of the purchase price, but not when the borrower's equity reaches over twenty-two percent. (There are some loans that are excluded -like some "high risk' loans.) The good news is that you can request cancelation of your PMI yourself (for a mortgage loan that closed after July '99), regardless of the original price of purchase, after the equity climbs to twenty percent.

Verify the numbers

Familiarize yourself with your mortgage statements to keep a running total of principal payments. Find out the prices of other houses in your neighborhood. If your mortgage is under five years old, probably you haven't greatly reduced principal � you have paid mostly interest.

Proof of Equity

You can start the process of PMI cancelation at the time you're sure your equity has reached 20%. You will need to notify your mortgage lender that you wish to cancel PMI payments. The lending institution will ask for documentation that your equity is at 20 percent or above. 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 canceling PMI.

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

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