Canceling Private Mortgage Insurance

For loans closed after July 1999, lenders are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance gets lower than 78 percent of your purchase amount � but not when the borrower earns 22 percent equity. (The legal obligation does not apply to certain higher risk mortgages.) But you are able to cancel PMI yourself (for loans closed after July 1999) at the point your equity rises to 20 percent, without consideration of the original purchase price.

Keep a running total of payments

Review your monthly statements often. Also be aware of what other homes are purchased for in your neighborhood. You are paying mostly interest if you closed your loan fewer than 5 years ago, so your principal probably hasn't been reduced by much.

Proof of Equity

You can start the process of PMI cancelation when you're sure your equity reaches 20%. Contact your mortgage lender to ask for cancellation of your Private Mortgage Insurance. 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 using form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.

F&T Mortgage, Inc. NMLS # 168839 (www.nmlsconsumeraccess.org) can help find out if you can eliminate your PMI. Give us a call: 214-300-8756.



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