Make Private Mortgage Insurance a Thing of the Past

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While lending institutions have been legally required (for loans closed past July 1999) to cancel Private Mortgage Insurance (PMI) at the time the loan balance goes below 78% of the price of purchase, they do not have to cancel PMI automatically if the equity is over 22%. (This legal requirement does not cover some higher risk mortgages.) However, you are able to cancel PMI yourself (for mortgage loans closed after July 1999) at the point your equity gets to 20 percent, without consideration of the original price of purchase.

Keep track of payments

Study your loan statements often. Pay attention to the prices of other houses in your immediate area. Unfortunately, if yours is a recent loan - five years or fewer, you probably haven't had a chance to pay very much of the principal: you are paying mostly interest.

Proof of Equity

Once you determine you have achieved at least 20 percent equity in your home, you can start the process of canceling your Private Mortgage Insurance. You will need to notify your mortgage lender that you wish to cancel PMI. Lending institutions request proof of eligibility at this point. You can get proof of your home's equity by getting a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.

At PREMIERE MORTGAGE SERVICES INC., we answer questions about PMI every day. Call us: 978-422-2311.