Make Private Mortgage Insurance a Thing of the Past

While lending institutions have been required (for loans closed past July 1999) to cancel Private Mortgage Insurance (PMI) at the time the loan balance dips under 78% of the purchase price, they do not have to cancel PMI automatically if the equity is over 22%. (There are some exceptions -like some loans considered 'high risk'.) However, if your equity reaches 20% (regardless of the original price of purchase), you can cancel the PMI (for a mortgage loan closed after July 1999).

Keep a record of payments

Study your monthly statements often. Also be aware of the price that other homes are being sold for in your neighborhood. Unfortunately, if yours is a recent mortgage loan - five years or under, you probably haven't begun to pay very much of the principal: you have been paying mostly interest.

Verify Eligibility

Once your equity has reached the magic number of twenty percent, you are not far away from getting rid of your PMI payments, once and for all. You will need to notify your mortgage lender that you wish to cancel PMI payments. Lenders request paperwork verifying your eligibility at this point. Usually lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your equity and eligibility for PMI cancellation.

At First Southeast Mortgage Corporation, we answer questions about PMI every day. Call us: 954.920.9799.

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