Eliminating Private Mortgage Insurance

Since 1999, lenders have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for a loan made after July of that year) reaches less than seventy-eight percent of the purchase price, but not at the time the loan's equity climbs to twenty-two percent or higher. (A number of "higher risk" morgages are not included.) But you have the right to cancel PMI yourself (for loans closed after July 1999) at the point your equity rises to 20 percent, regardless of the original purchase price.

Verify the numbers

Study your monthly statements often. Pay attention to the prices of other houses in your neighborhood. If your loan is fewer than five years old, it's likely you haven't made much progress with the principal � you have paid mostly interest.

The Proof is in the Appraisal

You can begin the process of PMI cancelation as soon as you you think that your equity has reached 20%. Contact the mortgage lender to request cancellation of your Private Mortgage Insurance. Lending institutions require proof of eligibility at this point. Usually lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your home's equity and eligibility for canceling PMI.

At HT Lending Group, LLC, we answer questions about PMI every day. Call us: 817-431-8618.

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