Canceling Private Mortgage Insurance

Although lenders have been obligated (for loans closed after July '99) to cancel Private Mortgage Insurance (PMI) at the time the balance dips below 78% of the price of purchase, they do not have to cancel automatically if the equity is more than 22%. (This legal requirment does not apply to some higher risk mortgages.) But if your equity gets to 20% (no matter what the original price was), you have the legal right to cancel PMI (for a loan that after July 1999).

Do your homework

Keep a running total of your principal payments. Pay attention to the selling prices of other houses in your neighborhood. If your mortgage is under five years old, chances are you haven't paid down much principal � you have been paying mostly interest.

The Proof is in the Appraisal

You can begin the process of canceling PMI when you you think that your equity has reached 20%. First you will let your lending institution know that you are requesting to cancel your PMI. Lending institutions ask for documentation verifying your 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'll cancel PMI.

Front Range Lending can answer questions about PMI and many others. Call us at 7202537070.