Make Private Mortgage Insurance a Thing of the Past

Since 1999, lending institutions have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for loans closed after July of that year) goes under seventy-eight percent of the price of purchase, but not when the borrower's equity reaches twenty-two percent or higher. (Some "higher risk" loan programs are not included.) But you can actually cancel PMI yourself (for loans made past July 1999) at the point your equity reaches 20 percent, no matter the original price of purchase.

Do your homework

Analyze your loan statements often. Also keep track of the price that other homes are being sold for in your neighborhood. Unfortunately, if yours is a new mortgage loan - five years or fewer, you likely haven't started to pay much of the principal: you have been paying mostly interest.

Proof of Equity

At the point you think you have achieved at least 20 percent equity in your home, you can start the process of freeing yourself from PMI payments. You will need to contact your lender to let them know that you wish to cancel PMI. Next, you will be required to verify that you have at least 20 percent equity. You can get proof of your equity by getting a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lenders before canceling PMI.

Coleman Mortgage Company can answer questions about PMI and many others. Give us a call: 972-932-9083.


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