Goodbye, PMI!

Since 1999, lenders have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for loans made after July of that year) reaches less than seventy-eight percent of the purchase price, but not at the time the loan's equity reaches twenty-two percent or more. (A number of "higher risk" mortgage loans are excluded.) However, you have the right to cancel PMI yourself (for loans closed after July 1999) at the point your equity rises to 20 percent, no matter the original purchase price.

Verify the numbers

Review your statements often. Also keep track of the price that other homes are purchased for in your neighborhood. You are paying mostly interest if the closing was fewer than 5 years ago, so your principal probably hasn't lowered much.

The Proof is in the Appraisal

At the point you determine you have reached 20 percent equity in your home, you can start the process of canceling your Private Mortgage Insurance. You will need to contact the mortgage lender to let them know that you want to cancel PMI payments. Your lender will ask for documentation that your equity is high enough. 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.

At Channel Mortgage LLC, we answer questions about PMI every day. Give us a call at 7186399500.

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Channel Mortgage LLC

Connecting the Dots to Home Ownership

55-25 69th Street 1st Floor
Maspeth, NY 11378-1806