Goodbye, PMI!

Since 1999, lending institutions have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for a loan closed past July of that year) reaches less than seventy-eight percent of the purchase price, but not when the borrower's equity reaches higher than twenty-two percent. (There are some loans that are not covered by this law -like some "high risk' loans.) But if your equity gets to 20% (regardless of the original price of purchase), you have the legal right to cancel PMI (for a loan closed after July 1999).

Verify the numbers

Keep a running total of each principal payment. You'll want to be aware of the prices of the houses that sell around you. You are paying mostly interest if you closed your mortgage fewer than 5 years ago, so your principal probably hasn't lowered much.

Proof of Equity

At the point you determine you have achieved at least 20 percent equity, you can start the process of freeing yourself from PMI payments. Call your lending institution to ask for cancellation of PMI. The lending institution will require proof that your equity is at 20 percent or above. Most lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your equity and eligibility for canceling PMI.

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

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