Canceling Private Mortgage Insurance

For loans made after July 1999, lenders are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan falls below 78 percent of the purchase price � but not when the loan reaches 22 percent equity. (The legal obligation does not include a number of higher risk mortgages.) But if your equity gets to 20% (no matter what the original purchase price was), you have the legal right to cancel your PMI (for a mortgage that past July 1999).

Keep a record of payments

Review your statements often. Also be aware of the price that other homes are being sold for in your neighborhood. You've been paying mostly interest if your loan closed fewer than 5 years ago, so your principal probably hasn't gone down much.

Verify Eligibility

When you determine you've achieved at least 20 percent equity in your home, you can begin the process of freeing yourself from PMI payments. You will need to call your lending institution to alert them that you want to cancel PMI. Next, you will be required to verify that you are eligible to cancel. You can acquire proof of your equity by getting a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.

Executive Lending Group can answer questions about PMI and many others. Call us: (405) 822-1957.

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