Goodbye, PMI!

While lending institutions have been legally required (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) at the time the loan balance dips under 78% of the purchase price, they do not have to cancel PMI automatically if the loan's equity is over 22%. (A number of "higher risk" mortgage loans are excluded.) The good news is that you can cancel your PMI yourself (for a mortgage closing after July '99), without considering the original purchase price, at the point the equity gets to twenty percent.

Keep a running total of payments

Familiarize yourself with your mortgage statements to keep your eye on principal payments. Pay attention to the purchase prices of other homes in your neighborhood. You are paying mostly interest if the closing was fewer than 5 years ago, so your principal probably hasn't been reduced by much.

Verify Eligibility

You can begin the process of PMI cancelation as soon as you you think that your equity reaches 20%. First you will let your lender know that you are asking to cancel PMI. Next, you will be asked to submit documentation that you are eligible to cancel. The best proof there is can be found in a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.

At Stepping Stone Mortgage, we answer questions about PMI every day. Give us a call: 5416833300.