Canceling Private Mortgage Insurance

While lenders have been legally obligated (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) at the time the loan balance dips under 78% of the price of purchase, they do not have to take similar action if the equity is above 22%. (A number of "higher risk" mortgage loans are excluded.) But if your equity reaches 20% (no matter what the original purchase price was), you are able to cancel your PMI (for a mortgage that after July 1999).

Do your homework

Study your statements often. Make yourself aware of the prices of other houses in your neighborhood. Unfortunately, if yours is a recent mortgage loan - five years or fewer, you likely haven't started to pay a lot of the principal: you have been paying mostly interest.

Proof of Equity

Once you determine you've reached 20 percent equity, you can begin the process of canceling your Private Mortgage Insurance. Call your lender to ask for cancellation of your Private Mortgage Insurance. Then you will be asked to submit documentation that you have at least 20 percent equity. Most lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your home's equity and eligibility for PMI cancellation.

Stepping Stone Mortgage can answer questions about PMI and many others. Call us: 5416833300.