Eliminating Private Mortgage Insurance

Although lending institutions have been required (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) at the point the loan balance gets below 78% of the purchase price, they do not have to take similar action if the equity is more than 22%. (Some "higher risk" loans are not included.) The good news is that you can request cancelation of your PMI yourself (for your loan that closed past July '99), without considering the original purchase price, at the point your equity reaches twenty percent.

Verify the numbers

Keep a running total of money going toward the principal. Also keep track of the price that other homes are being sold for in your neighborhood. You are paying mostly interest if you closed your mortgage loan fewer than 5 years ago, so your principal most likely hasn't lowered much.

Verify Equity Amount

At the point you think you've achieved at least 20 percent equity, you can begin the process of getting PMI out of your budget. You will first notify your lender that you are requesting to cancel PMI. Lenders require documentation verifying your eligibility at this point. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and your lender will probably request one before they'll cancel PMI.

Ward Kilduff Mortgage can answer questions about PMI and many others. Give us a call at (860) 658-7100.

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