Make Private Mortgage Insurance a Thing of the Past

Although lenders have been legally obligated (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) at the point the loan balance dips below 78% of the purchase price, they do not have to cancel PMI automatically if the borrower's equity is over 22%. (There are exceptions -like some "high risk' loans.) However, you are able to cancel PMI yourself (for loans made after July 1999) when your equity rises to 20 percent, no matter the original price of purchase.

Keep track of payments

Familiarize yourself with your loan statements to keep track of principal payments. You'll want to keep track of the the purchase amounts of the houses that sell around you. Unfortunately, if you have a new mortgage - five years or fewer, you probably haven't begun to pay very much of the principal: you are paying mostly interest.

The Proof is in the Appraisal

At the point you think you've achieved at least 20 percent equity in your home, you can begin the process of freeing yourself from PMI payments. You will need to notify your mortgage lender that you want to cancel PMI payments. Lending institutions ask for paperwork verifying your eligibility at this point. Most lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your equity and eligibility for canceling PMI.

Capacity Lending, LLC can answer questions about PMI and many others. Give us a call: 469-640-0400.

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