Make Private Mortgage Insurance a Thing of the Past

Beginning in 1999, lending institutions have been legally obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for loans made after July of '99) goes down below seventy-eight percent of the price of purchase, but not at the point the borrower's equity gets to twenty-two percent or higher. (This law does not cover certain higher risk mortgages.) However, if your equity rises to 20% (regardless of the original price of purchase), you have the right to cancel your PMI (for a mortgage loan closed past July 1999).

Keep track of payments

Familiarize yourself with your mortgage statements to keep track of principal payments. Also keep track of what other homes are selling for in your neighborhood. You've been paying mostly interest if you closed your mortgage fewer than 5 years ago, so your principal most likely hasn't lowered much.

Verify Equity Amount

At the point you think you've reached 20 percent equity in your home, you can start the process of getting PMI out of your budget. Call the lender to request cancellation of your Private Mortgage Insurance. Your lender will require documentation 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 verify your home's equity and eligibility for PMI cancellation.

Capacity Lending, LLC can help find out if you can eliminate your PMI. Call us: 469-640-0400.

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