Canceling Private Mortgage Insurance

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For loans closed after July 1999, lending institutions are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan gets below 78 percent of the purchase price - but not at the point the borrower earns 22 percent equity. (Certain "higher risk" mortgages are excluded.) The good news is that you can cancel your PMI yourself (for your mortgage closing after July '99), without considering the original price of purchase, when your equity rises to twenty percent.

Do your homework

Familiarize yourself with your loan statements to keep your eye on principal payments. You'll want to keep track of the the purchase amounts of the houses that sell in your neighborhood. You've been paying mostly interest if your closing was fewer than 5 years ago, so your principal most likely hasn't gone down much.

Proof of Equity

You can start the process of PMI cancellation at the time you're sure your equity reaches 20%. Call your lender to ask for cancellation of PMI. Lending institutions ask for proof of eligibility at this point. 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.

Tigers Community Credit Union can help find out if you can eliminate your PMI. Call us at 573-443-8462.

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