Canceling Private Mortgage Insurance

Since 1999, lenders have been legally obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for a loan made after July of '99) goes beneath seventy-eight percent of the purchase price, but not when the loan's equity reaches twenty-two percent or more. (There are some exceptions -like some loans considered 'high risk'.) However, you have the right to cancel PMI yourself (for loans made after July 1999) at the point your equity rises to 20 percent, no matter the original price of purchase.

Verify the numbers

Familiarize yourself with your loan statements to keep your eye on principal payments. You'll want to stay aware of the the purchase amounts of the houses that sell in your neighborhood. If your loan is fewer than five years old, probably you haven't paid down much principal � it's been mostly interest.

Verify Equity Amount

When you find you've achieved at least 20 percent equity in your home, you can start the process of getting PMI out of your budget. Contact your mortgage lender to ask for cancellation of your PMI. Lending institutions request proof of eligibility at this point. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) verifies your equity amount � and your lender will probably request one before they agree to cancel.

At Chris Caggiano - Grand Oaks Funding, LLC, we answer questions about PMI every day. Call us at (718) 477-4405.

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