Make Private Mortgage Insurance a Thing of the Past

For loans made since July 1999, lending institutions are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan falls under 78 percent of the purchase price � but not when the borrower achieves 22 percent equity. (There are exceptions -like some loans considered 'high risk'.) But you have the right to cancel PMI yourself (for loans closed after July 1999) at the point your equity rises to 20 percent, without consideration of the original price of purchase.

Verify the numbers

Familiarize yourself with your monthly statements to keep track of principal payments. You'll want to be aware of the the purchase amounts of the houses that sell in your neighborhood. If your loan is fewer than five years old, chances are you haven't paid down much principal � you have been paying mostly interest.

Proof of Equity

You can begin the process of PMI cancelation at the time you're sure your equity has reached 20%. You will first tell your lender that you are asking to cancel PMI. Lenders request proof of eligibility at this point. 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 lenders before canceling PMI.

Mutual Security Mortgage can help find out if you can eliminate your PMI. Give us a call at (303) 931-7879.

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