Make Private Mortgage Insurance a Thing of the Past

Since 1999, lenders have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) when his loan balance (for loans closed past July of '99) reaches less than seventy-eight percent of the price of purchase, but not at the point the loan's equity gets to twenty-two percent or higher. (Some "higher risk" loan programs are not included.) However, you are able to cancel PMI yourself (for mortgage loans closed after July 1999) when your equity rises to 20 percent, no matter the original price of purchase.

Keep a running total of payments

Review your mortgage statements often. Also keep track of the price that other homes are selling for in your neighborhood. Unfortunately, if you have a recent mortgage - five years or fewer, you probably haven't begun to pay a lot of the principal: you are paying mostly interest.

Proof of Equity

You can begin the process of PMI cancelation at the time you calculate that your equity reaches 20%. Contact the lender to request cancellation of your PMI. Lenders request proof of eligibility at this point. You can get documentation of your home's equity by getting a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lending institutions before canceling PMI.

At Foxfield Financial, we answer questions about PMI every day. Call us: 720-598-8300.

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