Goodbye, PMI!

While lenders have been legally obligated (for loans closed after July '99) to cancel Private Mortgage Insurance (PMI) at the point the loan balance gets below 78% of the purchase price, they do not have to take similar action if the loan's equity is above 22%. (There are exceptions -like some loans considered 'high risk'.) However, you are able to cancel PMI yourself (for mortgages made after July 1999) when your equity rises to 20 percent, no matter the original purchase price.

Do your homework

Review your statements often. You'll want to stay aware of the prices of the homes that are selling around you. You are paying mostly interest if you closed your mortgage fewer than 5 years ago, so your principal most likely hasn't gone down much.

The Proof is in the Appraisal

At the point your equity has reached the magic number of twenty percent, you are close to canceling your PMI payments, for the life of your loan. You will need to notify your mortgage lender that you want to cancel PMI. The lending institution will ask for documentation that your equity is at 20 percent or above. You can acquire documentation of your equity by getting a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lending institutions before canceling PMI.

At Mutual Security Mortgage, we answer questions about PMI every day. Give us a call: (303) 931-7879.

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