Eliminating Private Mortgage Insurance

Beginning in 1999, lenders have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for loans made past July of that year) goes under seventy-eight percent of the price of purchase, but not at the point the borrower's equity climbs to more than twenty-two percent. (There are some exceptions -like some loans considered 'high risk'.) However, if your equity gets to 20% (no matter what the original price was), you have the legal right to cancel PMI (for a mortgage that after July 1999).

Do your homework

Keep track of money going toward the principal. Make yourself aware of the purchase prices of other homes in your immediate area. You are paying mostly interest if the closing was fewer than 5 years ago, so your principal most likely hasn't been reduced by much.

Verify Equity Amount

Once your equity has risen to the required twenty percent, you are close to getting rid of your PMI payments, once and for all. You will first let your lending institution know that you are asking to cancel PMI. Lending institutions require paperwork verifying your eligibility at this point. 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 Amity Mortgage LLC, we answer questions about PMI every day. Call us at (203) 729-6681.

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