Canceling Private Mortgage Insurance

Although lending institutions have been obligated (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) when the balance gets under 78% of the price of purchase, they do not have to cancel PMI automatically if the borrower's equity is over 22%. (Some "higher risk" loan programs are excluded.) But if your equity rises to 20% (no matter what the original price was), you have the legal right to cancel PMI (for a loan that past July 1999).

Keep track of payments

Keep a running total of your principal payments. Find out the selling prices of other houses in your immediate area. If your loan is under five years old, it's likely you haven't paid down much principal � you have paid mostly interest.

The Proof is in the Appraisal

At the point you think you've reached 20 percent equity in your home, you can begin the process of freeing yourself from PMI payments. You will need to notify your mortgage lender that you wish to cancel PMI payments. Lenders require paperwork verifying your eligibility at this point. Most lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your home's equity and eligibility for PMI cancellation.

Foxfield Financial can help find out if you can eliminate your PMI. Give us a call at 720-598-8300.

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