Canceling Private Mortgage Insurance

For loans made after July 1999, lenders are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan falls lower than 78 percent of your purchase amount � but not at the point the loan reaches 22 percent equity. (There are some loans that are excluded -like a number of "high risk' loans.) However, you can actually cancel PMI yourself (for loans made after July 1999) at the point your equity rises to 20 percent, no matter the original purchase price.

Verify the numbers

Analyze your loan statements often. Make yourself aware of the purchase prices of other homes in your immediate area. You are paying mostly interest if your mortgage closed fewer than 5 years ago, so your principal most likely hasn't gone down much.

Verify Eligibility

You can start the process of PMI cancelation when you you think that your equity has reached 20%. Contact the lending institution to ask for cancellation of your Private Mortgage Insurance. Next, you will be asked to submit proof that you have at least 20 percent equity. Most lenders ask for 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.

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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