Goodbye, PMI!

Since 1999, lending institutions have been required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for a loan closed after July of '99) reaches less than seventy-eight percent of the price of purchase, but not at the time the loan's equity reaches more than twenty-two percent. (There are some exceptions -like some loans considered 'high risk'.) However, you are able to cancel PMI yourself (for mortgage loans closed after July 1999) once your equity reaches 20 percent, no matter the original purchase price.

Verify the numbers

Keep track of each principal payment. Also stay aware of what other homes are being sold for in your neighborhood. Unfortunately, if you have a new mortgage loan - five years or under, you likely haven't begun to pay much of the principal: you have been paying mostly interest.

The Proof is in the Appraisal

Once your equity has reached the magic number of twenty percent, you are close to canceling your PMI payments, once and for all. You will first let your lender know that you are asking to cancel your PMI. Your lender will require proof that your equity is at 20 percent or above. Usually 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.

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

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