Canceling Private Mortgage Insurance

Although lenders have been required (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) at the point the balance gets under 78% of the price of purchase, they do not have to take similar action if the loan's equity is above 22%. (Certain "higher risk" mortgage loans are excluded.) The good news is that you can cancel your PMI yourself (for a mortgage that closed after July '99), without considering the original price of purchase, after your equity gets to twenty percent.

Do your homework

Analyze your monthly statements often. You'll want to stay aware of the the purchase prices of the homes that sell in your neighborhood. If your mortgage is fewer than five years old, it's likely you haven't made much progress with the principal � you have been paying mostly interest.

The Proof is in the Appraisal

As soon as your equity has risen to the magic number of twenty percent, you are close to stopping your PMI payments, once and for all. You will need to notify your mortgage lender that you want to cancel PMI payments. Next, you will be asked to verify that you are eligible to cancel. Most lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your equity and eligibility for canceling PMI.

BeneGroup, Inc. can answer questions about PMI and many others. Call us: 4083956018.