Make Private Mortgage Insurance a Thing of the Past

While lending institutions have been required (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) at the point the mortgage balance gets under 78% of the price of purchase, they do not have to cancel PMI automatically if the borrower's equity is over 22%. (Certain "higher risk" loan programs are not included.) But if your equity rises to 20% (no matter what the original purchase price was), you have the legal right to cancel PMI (for a mortgage closed after July 1999).

Keep a record of payments

Study your mortgage statements often. You'll want to stay aware of the prices of the houses that are selling in your neighborhood. Unfortunately, if yours is a recent loan - five years or fewer, you probably haven't had a chance to pay very much of the principal: you are paying mostly interest.

Verify Equity Amount

When you determine you have reached 20 percent equity, you can begin the process of canceling your Private Mortgage Insurance. Call the mortgage lender to request cancellation of PMI. The lending institution will ask for proof that your equity is high enough. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and your lender will probably require one before they agree to cancel PMI.

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

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