Make Private Mortgage Insurance a Thing of the Past

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Although lending institutions 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 price of purchase, they do not have to cancel PMI automatically if the loan's equity is over 22%. (A number of "higher risk" loan programs are not included.) However, if your equity gets to 20% (no matter what the original purchase price was), you can cancel the PMI (for a mortgage loan that after July 1999).

Verify the numbers

Keep a running total of your principal payments. Make yourself aware of the selling prices of other homes in your immediate area. Unfortunately, if yours is a recent mortgage loan - five years or fewer, you likely haven't been able to pay very much of the principal: you are paying mostly interest.

The Proof is in the Appraisal

At the point you determine you have reached 20 percent equity, you can start the process of getting PMI out of your budget. You will need to contact your lending institution to alert them that you wish to cancel PMI payments. Then you will be asked to verify that you are eligible to cancel. Most lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your home's equity and eligibility for PMI cancellation.

Laser Lending can answer questions about PMI and many others. Call us at 801.999.0493.

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