Make Private Mortgage Insurance a Thing of the Past

For loans closed since July 1999, lenders are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan gets lower than 78 percent of the purchase amount � but not at the point the loan reaches 22 percent equity. (There are some loans that are not covered by this law -like some loans considered 'high risk'.) However, you can actually cancel PMI yourself (for mortgage loans closed past July 1999) once your equity reaches 20 percent, no matter the original purchase price.

Verify the numbers

Study your statements often. You'll want to keep track of the the purchase amounts of the homes that sell around you. You've been paying mostly interest if you closed your mortgage fewer than 5 years ago, so your principal probably hasn't been reduced by much.

The Proof is in the Appraisal

At the point you find you have achieved at least 20 percent equity in your home, you can begin the process of canceling your Private Mortgage Insurance. You will need to notify your mortgage lender that you want to cancel PMI payments. Lending institutions request proof of eligibility at this point. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is all the proof you need � and most lenders require one before they agree to cancel PMI.

Longhorn Mortgage can help find out if you can eliminate your PMI. Call us at 512-302-9410.

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