Make Private Mortgage Insurance a Thing of the Past

For loans made since July 1999, lenders are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan gets lower than 78 percent of the purchase amount � but not when the loan reaches 22 percent equity. (The law does not cover certain higher risk mortgages.) But you can actually cancel PMI yourself (for loans made after July 1999) at the point your equity reaches 20 percent, regardless of the original purchase price.

Verify the numbers

Study your statements often. You'll want to be aware of the prices of the homes that are selling in your neighborhood. If your loan is fewer than five years old, chances are you haven't greatly reduced principal � you have been paying mostly interest.

Verify Equity Amount

You can start the process of canceling your PMI at the time you're sure your equity has risen to 20%. Call the mortgage lender to request cancellation of your Private Mortgage Insurance. Lending institutions require documentation verifying your eligibility at this point. Most lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your equity and eligibility for canceling PMI.

Real Property Finance can help find out if you can eliminate your PMI. Give us a call at 310-379-5997.

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