Canceling Private Mortgage Insurance

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While lenders have been legally required (for loans closed past July 1999) to cancel Private Mortgage Insurance (PMI) at the point the mortgage balance gets below 78% of the price of purchase, they do not have to cancel PMI automatically if the equity is more than 22%. (This law does not apply to some higher risk mortgages.) However, you are able to cancel PMI yourself (for loans closed after July 1999) when your equity rises to 20 percent, regardless of the original purchase price.

Keep a running total of payments

Analyze your loan statements often. Find out the purchase prices of other homes in your immediate area. You are paying mostly interest if you closed your mortgage fewer than 5 years ago, so your principal probably hasn't gone down much.

The Proof is in the Appraisal

You can begin the process of PMI cancellation as soon as you're sure your equity has risen to 20%. You will first tell your lender that you are requesting to cancel your PMI. Your lender will require documentation that your equity is at 20 percent or above. Usually lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your home's equity and eligibility for PMI cancellation.

Alpine Capital Mortgage can answer questions about PMI and many others. Give us a call: (208) 726-5466.

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