Make Private Mortgage Insurance a Thing of the Past

Since 1999, lenders have been required to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for a loan closed past July of that year) goes below seventy-eight percent of the price of purchase, but not when the borrower's equity reaches more than twenty-two percent. (This law does not cover some higher risk mortgages.) However, if your equity reaches 20% (regardless of the original purchase price), you have the right to cancel your PMI (for a mortgage that after July 1999).

Keep a record of payments

Keep track of your principal payments. Also keep track of how much other homes are purchased for in your neighborhood. If your mortgage is fewer than five years old, probably you haven't made much progress with the principal � it's been mostly interest.

Proof of Equity

You can begin the process of PMI cancelation at the time you calculate that your equity has risen to 20%. You will need to contact the mortgage lender to alert them that you want to cancel PMI. Your lender will request proof that your equity is at 20 percent or above. The best proof there is can be found in a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lending institutions before canceling PMI.

Community Trust Lending Team at Norcom Mortgage-NMLS ID#71655 can help find out if you can eliminate your PMI. Call us: (203) 526-9345.

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