Eliminating Private Mortgage Insurance

While lenders have been required (for loans closed after July '99) to cancel Private Mortgage Insurance (PMI) at the point the mortgage balance goes below 78% of the purchase price, they do not have to take similar action if the equity is above 22%. (There are exceptions -like some loans considered 'high risk'.) The good news is that you can request cancelation of your PMI yourself (for your loan closing after July '99), regardless of the original purchase price, at the point the equity reaches twenty percent.

Do your homework

Keep track of your principal payments. Make yourself aware of the selling prices of other houses in your immediate area. Unfortunately, if you have a recent mortgage loan - five years or fewer, you probably haven't had a chance to pay very much of the principal: you are paying mostly interest.

The Proof is in the Appraisal

Once you determine you've reached 20 percent equity in your home, you can begin the process of freeing yourself from PMI payments. Call your mortgage lender to request cancellation of PMI. Lenders require documentation verifying your eligibility at this point. Usually lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your home's equity and eligibility for canceling PMI.

The Lending Source can help find out if you can eliminate your PMI. Give us a call: (973) 601-2122.

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