Goodbye, PMI!

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Although lending institutions have been obligated (for loans closed after July '99) to cancel Private Mortgage Insurance (PMI) at the time the loan balance goes under 78% of the purchase price, they do not have to cancel PMI automatically if the borrower's equity is above 22%. (There are exceptions -like some loans considered 'high risk'.) However, if your equity reaches 20% (regardless of the original purchase price), you have the right to cancel PMI (for a mortgage loan that past July 1999).

Do your homework

Familiarize yourself with your monthly statements to keep a running total of principal payments. Also be aware of the price that other homes are purchased for in your neighborhood. If your mortgage is under five years old, chances are you haven't made much progress with the principal - you have been paying mostly interest.

The Proof is in the Appraisal

Once you determine you have achieved at least 20 percent equity, you can start the process of canceling your Private Mortgage Insurance. You will need to call the lender to alert them that you wish to cancel PMI. Lending institutions require documentation verifying your eligibility at this point. Usually lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your equity and eligibility for PMI cancellation.

At Integrated Financial Solutions, LLC, we answer questions about PMI every day. Call us: 410.461.4043.