Make Private Mortgage Insurance a Thing of the Past

While lending institutions have been obligated (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) at the point the mortgage balance gets below 78% of the price of purchase, they do not have to take similar action if the borrower's equity is over 22%. (There are exceptions -like some "high risk' loans.) But you can actually cancel PMI yourself (for mortgage loans made after July 1999) when your equity rises to 20 percent, without consideration of the original purchase price.

Do your homework

Familiarize yourself with your monthly statements to keep a running total of principal payments. Make yourself aware of the selling prices of other houses in your neighborhood. You've been paying mostly interest if your mortgage loan closed fewer than 5 years ago, so your principal probably hasn't gone down much.

Proof of Equity

At the point you determine you have achieved at least 20 percent equity, you can start the process of canceling your Private Mortgage Insurance. Call the lending institution to ask for cancellation of your PMI. Lending institutions ask for proof of eligibility at this point. Usually lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your home's equity and eligibility for canceling PMI.

At Stepping Stone Mortgage, we answer questions about PMI every day. Call us at 5416833300.