Eliminating Private Mortgage Insurance

Beginning in 1999, lenders have been legally obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for a loan made after July of '99) reaches less than seventy-eight percent of the purchase price, but not when the loan's equity climbs to twenty-two percent or higher. (The legal obligation does not cover some higher risk mortgages.) However, if your equity reaches 20% (no matter what the original purchase price was), you have the right to cancel the PMI (for a loan that past July 1999).

Verify the numbers

Analyze your mortgage statements often. You'll want to stay aware of the prices of the homes that are selling in your neighborhood. You've been paying mostly interest if the closing was fewer than 5 years ago, so your principal probably hasn't been reduced by much.

Proof of Equity

At the point your equity has risen to the required twenty percent, you are just a few steps away from getting rid of your PMI payments, once and for all. Call your lender to ask for cancellation of PMI. Lending institutions require proof of eligibility at this point. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and your lender will probably require one before they agree to cancel PMI.

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

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