Eliminating Private Mortgage Insurance
While lending institutions have been obligated (for loans closed after July '99) to cancel Private Mortgage Insurance (PMI) at the time the loan balance goes below 78% of the purchase price, they do not have to cancel PMI automatically if the loan's equity is more than 22%. (A number of "higher risk" mortgage loans are not included.) However, if your equity gets to 20% (regardless of the original purchase price), you can cancel PMI (for a mortgage loan closed after July 1999).
Keep a running total of payments
Keep track of each principal payment. Make yourself aware of the prices of other homes in your immediate area. If your loan is fewer than five years old, it's likely you haven't paid down much principal � it's been mostly interest.
The Proof is in the Appraisal
Once your equity has reached the required twenty percent, you are not far away from canceling your PMI payments, once and for all. Call the lending institution to request cancellation of PMI. The lending institution will require proof that your equity is at 20 percent or above. The best proof there is can be found in a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lending institutions before canceling PMI.
At Crown Mortgage, we answer questions about PMI every day. Call us: (434) 975-5626.
Got a Question?
Do you have a question? We can help. Simply fill out the form below and we'll contact you with the answer, with no obligation to you. We guarantee your privacy.