Make Private Mortgage Insurance a Thing of the Past

For loans closed since July 1999, lending institutions are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan gets under 78 percent of your purchase amount � but not at the point the loan reaches 22 percent equity. (There are exceptions -like some "high risk' loans.) The good news is that you can request cancelation of your PMI yourself (for your mortgage closing past July '99), regardless of the original price of purchase, after your equity rises to twenty percent.

Keep a running total of payments

Keep track of each principal payment. You'll want to keep track of the prices of the homes that sell around you. If your mortgage is under five years old, chances are you haven't made much progress with the principal � you have paid mostly interest.

Verify Equity Amount

As soon as your equity has risen to the desired twenty percent, you are not far away from stopping your PMI payments, for the life of your loan. Contact the lender to ask for cancellation of PMI. Lenders require paperwork verifying your eligibility at this point. The best proof there is can be found in a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lending institutions before canceling PMI.

Longhorn Mortgage can answer questions about PMI and many others. Give us a call: 512-302-9410.

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