Canceling Private Mortgage Insurance

For loans closed since July 1999, lenders are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance gets under 78 percent of the purchase price � but not at the point the borrower earns 22 percent equity. (The legal obligation does not cover certain higher risk mortgages.) But if your equity gets to 20% (regardless of the original price of purchase), you are able to cancel PMI (for a mortgage closed after July 1999).

Do your homework

Study your monthly statements often. You'll want to stay aware of the the purchase amounts of the houses that sell around you. You are paying mostly interest if you closed your mortgage loan fewer than 5 years ago, so your principal probably hasn't gone down much.

Verify Eligibility

You can start the process of PMI cancelation at the time you're sure your equity has reached 20%. You will need to contact your mortgage lender to let them know that you want to cancel PMI payments. Then you will be required to submit proof that you are eligible to cancel. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is all the proof you need � and your lender will probably require one before they agree to cancel PMI.

At Bright Vision Mortgage, we answer questions about PMI every day. Give us a call: (904) 342-3622.

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