Canceling Private Mortgage Insurance

Since 1999, lending institutions have been required to cancel a borrower's Private Mortgage Insurance (PMI) when his loan balance (for loans made after July of that year) reaches less than seventy-eight percent of the purchase price, but not when the borrower's equity climbs to twenty-two percent or more. (A number of "higher risk" loans are excluded.) However, you have the right to cancel PMI yourself (for mortgage loans made after July 1999) at the point your equity rises to 20 percent, regardless of the original price of purchase.

Verify the numbers

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

The Proof is in the Appraisal

At the point your equity has risen to the required twenty percent, you are not far away from getting rid of your PMI payments, once and for all. First you will let your lending institution know that you are requesting to cancel PMI. Next, you will be asked to verify that you are eligible to cancel. The best proof there is can be found in a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lenders before canceling PMI.

First Community Bank of Central Al. can answer questions about PMI and many others. Call us: (334) 285-8850.

Got a Question?

Do you have a question? We can help. Simply fill out the form below and we'll contact you with the answer, with no obligation to you. We guarantee your privacy.

Your Information
Your Question