Make Private Mortgage Insurance a Thing of the Past

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Beginning in 1999, lenders have been legally obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his loan balance (for a loan closed past July of '99) goes under seventy-eight percent of the price of purchase, but not when the borrower's equity gets to twenty-two percent or more. (Certain "higher risk" loans are not included.) The good news is that you can cancel your PMI yourself (for a mortgage that closed past July '99), without considering the original purchase price, after the equity reaches twenty percent.

Verify the numbers

Familiarize yourself with your mortgage statements to keep your eye on principal payments. You'll want to stay aware of the the purchase amounts of the homes that sell in your neighborhood. If your mortgage is fewer than five years old, probably you haven't paid down much principal - it's been mostly interest.

Verify Eligibility

Once your equity has reached the magic number of twenty percent, you are close to getting rid of your PMI payments, for the life of your loan. Contact the lender to request cancellation of PMI. Next, you will be asked to submit proof that you are eligible to cancel. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is - and your lender will probably require one before they agree to cancel.

Javier Jurado MLO-138690 can answer questions about PMI and many others. Call us at (206) 234-7544.