Goodbye, PMI!

For loans closed after July 1999, lenders are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan gets lower than 78 percent of your purchase amount � but not when the borrower earns 22 percent equity. (The law does not apply to a number of higher risk mortgages.) But if your equity gets to 20% (regardless of the original price of purchase), you have the right to cancel your PMI (for a mortgage loan that past July 1999).

Verify the numbers

Keep track of each principal payment. Also stay aware of the price that other homes are purchased for in your neighborhood. You are paying mostly interest if the closing was fewer than 5 years ago, so your principal probably hasn't been reduced by much.

Verify Eligibility

At the point your equity has risen to the magic number of twenty percent, you are close to stopping your PMI payments, once and for all. First you will let your lender know that you are requesting to cancel PMI. Lending institutions require paperwork verifying your eligibility at this point. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is all the proof you need � and your lender will probably request one before they'll cancel PMI.

At Valley Savers Mortgage, LLC, we answer questions about PMI every day. Call us: (602) 332-9544.

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