Goodbye, PMI!

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Since 1999, lenders have been 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 gets to twenty-two percent or higher. (There are some exceptions -like some loans considered 'high risk'.) The good news is that you can cancel your PMI yourself (for a loan closing after July '99), without considering the original purchase price, once your equity reaches twenty percent.

Verify the numbers

Familiarize yourself with your monthly statements to keep track of principal payments. Also keep track of the price that other homes are purchased for in your neighborhood. You've been paying mostly interest if your mortgage closed fewer than 5 years ago, so your principal most likely hasn't gone down much.

Verify Eligibility

Once you determine you have reached 20 percent equity, you can start the process of canceling your Private Mortgage Insurance. Call the lender to ask for cancellation of your PMI. Lenders ask for paperwork verifying your eligibility at this point. The best proof there is can be found in a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), required by most lending institutions before canceling PMI.

Reliant Mortgage Ltd can answer questions about PMI and many others. Call us: (214) 545-5700.