Make Private Mortgage Insurance a Thing of the Past

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While lending institutions have been legally required (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) when the balance goes under 78% of the price of purchase, they do not have to take similar action if the equity is more than 22%. (Certain "higher risk" loans are not included.) However, if your equity reaches 20% (regardless of the original price of purchase), you can cancel PMI (for a mortgage that past July 1999).

Verify the numbers

Keep a running total of money going toward the principal. Also be aware of how much other homes are purchased for in your neighborhood. If your mortgage is under five years old, probably you haven't greatly reduced principal it's been mostly interest.

Proof of Equity

As soon as your equity has risen to the magic number of twenty percent, you are close to canceling your PMI payments, once and for all. You will first tell your lender that you are requesting to cancel your PMI. The lending institution will require proof that your equity is at 20 percent or above. Most lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your equity and eligibility for canceling PMI.

Financial Brokers of America can help find out if you can eliminate your PMI. Give us a call: 562-696-3139.