Eliminating Private Mortgage Insurance

While lending institutions have been legally obligated (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) at the point the mortgage balance gets below 78% of the purchase price, they do not have to take similar action if the loan's equity is more than 22%. (The law does not include some higher risk mortgages.) The good news is that you can request cancelation of your PMI yourself (for your mortgage loan that closed after July '99), no matter the original price of purchase, after your equity rises to twenty percent.

Do your homework

Review your statements often. You'll want to keep track of the prices of the houses that sell around you. Unfortunately, if you have a recent mortgage - five years or fewer, you likely haven't started to pay much of the principal: you have been paying mostly interest.

The Proof is in the Appraisal

You can start the process of PMI cancelation when you're sure your equity has risen to 20%. You will need to notify your mortgage lender that you wish to cancel PMI payments. Lending institutions require paperwork verifying your eligibility at this point. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will be all the proof you need � and almost all lending institutions will require one before they agree to cancel PMI.

At Firelight Mortgage Consultants, we answer questions about PMI every day. Give us a call: (303) 228-2254.

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