Eliminating Private Mortgage Insurance

While lenders have been legally required (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) at the time the loan balance gets below 78% of the purchase price, they do not have to cancel automatically if the loan's equity is more than 22%. (This law does not include some higher risk mortgages.) But if your equity gets to 20% (no matter what the original purchase price was), you can cancel your PMI (for a loan closed past July 1999).

Keep a running total of payments

Keep a running total of your principal payments. Make yourself aware of the purchase prices of other houses in your neighborhood. You are paying mostly interest if your mortgage closed fewer than 5 years ago, so your principal probably hasn't gone down much.

Verify Eligibility

At the point your equity has reached the desired twenty percent, you are close to getting rid of your PMI payments, once and for all. Call your mortgage lender to request cancellation of your Private Mortgage Insurance. Then you will be required to submit documentation that you are eligible to cancel. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) documents your equity amount � and your lender will probably request one before they agree to cancel PMI.

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

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