Canceling Private Mortgage Insurance

While lenders have been legally obligated (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) at the time the balance goes under 78% of the purchase price, they do not have to cancel automatically if the equity is above 22%. (The legal requirment does not cover some higher risk mortgages.) However, if your equity reaches 20% (regardless of the original price of purchase), you have the legal right to cancel PMI (for a loan closed after July 1999).

Do your homework

Keep a running total of each principal payment. Also stay aware of what other homes are being sold for in your neighborhood. Unfortunately, if you have a new mortgage - five years or fewer, you probably haven't begun to pay very much of the principal: you are paying mostly interest.

The Proof is in the Appraisal

You can start the process of canceling your PMI when you determine your equity has reached 20%. Call the lender to ask for cancellation of your Private Mortgage Insurance. 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) documents your equity amount � and your lender will probably require one before they'll cancel PMI.

At Abbey Mortgage, we answer questions about PMI every day. Give us a call at 3523694200.

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Abbey Mortgage

Company NMLS#: 374095

2107 SE 3rd Ave.
Ocala, FL 34471