Eliminating Private Mortgage Insurance

For loans made after July 1999, lenders are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan falls under 78 percent of the purchase price � but not when the loan reaches 22 percent equity. (Certain "higher risk" mortgage loans are excluded.) The good news is that you can request cancelation of your PMI yourself (for your loan that closed past July '99), regardless of the original price of purchase, at the point your equity climbs to twenty percent.

Keep a running total of payments

Study your loan statements often. You'll want to keep track of the the purchase amounts of the houses that sell around you. Unfortunately, if yours is a new mortgage - five years or fewer, you probably haven't started to pay very much of the principal: you have been paying mostly interest.

The Proof is in the Appraisal

As soon as your equity has risen to the magic number of twenty percent, you are close to stopping your PMI payments, for the life of your loan. You will need to notify your mortgage lender that you want to cancel PMI. Lenders require documentation verifying your eligibility at this point. Usually lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your equity and eligibility for canceling PMI.

Channel Mortgage LLC can answer questions about PMI and many others. Give us a call: (718) 639-9500.

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