Eliminating Private Mortgage Insurance

Since 1999, lenders have been required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for loans closed after July of '99) goes below seventy-eight percent of the price of purchase, but not when the borrower's equity gets to twenty-two percent or higher. (There are some loans that are excluded -like some "high risk' loans.) The good news is that you can request cancelation of your PMI yourself (for a mortgage loan closing past July '99), no matter the original purchase price, when the equity gets to twenty percent.

Verify the numbers

Review your loan statements often. Also keep track of how much other homes are being sold for in your neighborhood. You've been paying mostly interest if your mortgage loan closed fewer than 5 years ago, so your principal probably hasn't been reduced by much.

Verify Equity Amount

Once your equity has reached the desired twenty percent, you are just a few steps away from canceling your PMI payments, for the life of your loan. You will need to notify your mortgage lender that you wish to cancel PMI payments. Then you will be asked to submit proof that you are eligible to cancel. You can get documentation of your home's equity by getting a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lenders before canceling PMI.

At Cottingham Mortgage Inc., we answer questions about PMI every day. Give us a call at (800) 288-9693.

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