How and When can I Cancel Private Mortgage Insurance


Since 1999, lenders have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for a loan made past July of that year) reaches less than seventy-eight percent of the price of purchase, but not at the point the borrower's equity gets to more than twenty-two percent. (Some "higher risk" mortgage loans are excluded.) The good news is that you can cancel your PMI yourself (for a loan closing after July '99), no matter the original purchase price, once the equity climbs to twenty percent.

Verify the numbers

Review your mortgage statements often. You'll want to stay aware of the the purchase prices of the houses that are selling 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 paid mostly interest.

The Proof is in the Appraisal

Once your equity has risen to the required twenty percent, you are just a few steps away from canceling your PMI payments, for the life of your loan. Contact your lender to ask for cancellation of your Private Mortgage Insurance. Lending institutions require proof of eligibility at this point. Most lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your home's equity and eligibility for PMI cancellation.

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Net Equity Financial Mortgage can answer questions about PMI and many others. Give us a call at (215)741-3131.

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