Canceling Private Mortgage Insurance

Beginning in 1999, lending institutions have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for a loan closed after July of that year) reaches less than seventy-eight percent of the price of purchase, but not at the time the loan's equity climbs to twenty-two percent or more. (There are some loans that are not covered by this law -like some loans considered 'high risk'.) But you have the right to cancel PMI yourself (for mortgages closed past July 1999) at the point your equity reaches 20 percent, no matter the original purchase price.

Do your homework

Keep track of your principal payments. You'll want to stay aware of the the purchase amounts of the homes that are selling around you. Unfortunately, if yours is a new mortgage - five years or under, you probably haven't started to pay much of the principal: you are paying mostly interest.

Verify Eligibility

You can start the process of PMI cancelation at the time you're sure your equity has reached 20%. You will need to call your lender to alert them that you want to cancel PMI payments. Next, you will be required to submit documentation that you are eligible to cancel. The best proof there is can be found in a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lending institutions before canceling PMI.

At F&T Mortgage, Inc. NMLS # 168839 (, we answer questions about PMI every day. Give us a call: 214-300-8756.