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 point the mortgage balance gets under 78% of the purchase price, they do not have to cancel PMI automatically if the loan's equity is more than 22%. (Some "higher risk" mortgage loans are not included.) But you can actually cancel PMI yourself (for loans closed after July 1999) when your equity gets to 20 percent, regardless of the original purchase price.

Verify the numbers

Familiarize yourself with your loan statements to keep track of principal payments. Also be aware of how much other homes are purchased for in your neighborhood. Unfortunately, if you have a recent mortgage - five years or under, you probably haven't been able to pay much of the principal: you have been paying mostly interest.

Verify Equity Amount

When you think you have achieved at least 20 percent equity in your home, you can begin the process of getting PMI out of your budget. You will first notify your lender that you are asking to cancel PMI. Then you will be required to verify that you have at least 20 percent equity. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) documents your equity amount � and your lender will probably require one before they'll cancel PMI.

At Coleman Mortgage Company, we answer questions about PMI every day. Give us a call at 972-932-9083.


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