Make Private Mortgage Insurance a Thing of the Past

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Although lenders have been legally required (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) at the point the balance goes below 78% of the purchase price, they do not have to cancel PMI automatically if the equity is more than 22%. (The legal requirement does not cover some higher risk mortgages.) However, if your equity gets to 20% (regardless of the original purchase price), you have the legal right to cancel your PMI (for a loan closed past July 1999).

Keep track of payments

Study your monthly statements often. You'll want to be aware of the the purchase amounts of the houses that are selling around you. You are paying mostly interest if your mortgage loan closed fewer than 5 years ago, so your principal probably hasn't lowered much.

The Proof is in the Appraisal

At the point your equity has risen to the desired twenty percent, you are close to stopping your PMI payments, for the life of your loan. Contact your lender to ask for cancellation of your PMI. The lending institution will require documentation that your equity is high enough. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will be all the proof you need - and most lenders require one before they'll cancel PMI.

At James M Dix (NMLS 135621), we answer questions about PMI every day. Call us at 317-773-0606.