Canceling Private Mortgage Insurance

Beginning in 1999, lending institutions have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for a loan made after July of '99) reaches less than seventy-eight percent of the price of purchase, but not when the loan's equity reaches more than twenty-two percent. (This legal obligation does not cover a number of higher risk mortgages.) However, if your equity rises to 20% (regardless of the original price of purchase), you have the legal right to cancel your PMI (for a loan closed past July 1999).

Do your homework

Keep track of your principal payments. You'll want to be aware of the the purchase prices of the houses that are selling around you. You are paying mostly interest if your closing was fewer than 5 years ago, so your principal probably hasn't gone down much.

Proof of Equity

Once your equity has risen to the desired twenty percent, you are close to canceling your PMI payments, for the life of your loan. Contact your lender to ask for cancellation of PMI. Then you will be asked to submit proof that you have at least 20 percent equity. The best proof there is can be found in a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.

Trustin Mortgage Corporation can help find out if you can eliminate your PMI. Call us at (302) 765-8089.

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