Canceling Private Mortgage Insurance

Since 1999, lending institutions have been legally obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for loans closed past July of '99) reaches less than seventy-eight percent of the price of purchase, but not at the time the borrower's equity reaches twenty-two percent or more. (There are exceptions -like some loans considered 'high risk'.) But you can actually cancel PMI yourself (for mortgages made after July 1999) when your equity reaches 20 percent, regardless of the original purchase price.

Verify the numbers

Review your mortgage statements often. You'll want to keep track of the the purchase amounts of the homes that sell around you. If your mortgage is under five years old, chances are you haven't paid down much principal � it's been mostly interest.

Verify Equity Amount

You can start the process of PMI cancelation as soon as you calculate that your equity reaches 20%. Call the lender to request cancellation of PMI. Lenders require documentation verifying your eligibility at this point. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will document your equity amount � and most lending institutions will require one before they'll cancel PMI.

Cottingham Mortgage Inc. can help find out if you can eliminate your PMI. Give us a call: (800) 288-9693.

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