Eliminating Private Mortgage Insurance

Since 1999, lenders have been legally obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for a loan made past July of that year) reaches less than seventy-eight percent of the price of purchase, but not when the loan's equity reaches higher than twenty-two percent. (The legal obligation does not include certain higher risk mortgages.) However, you are able to cancel PMI yourself (for mortgage loans closed past July 1999) when your equity reaches 20 percent, no matter the original price of purchase.

Verify the numbers

Familiarize yourself with your monthly statements to keep a running total of principal payments. Pay attention to the prices of other houses in your immediate area. If your loan is under five years old, it's likely you haven't made much progress with the principal � you have paid mostly interest.

The Proof is in the Appraisal

You can start the process of canceling your PMI as soon as you you think that your equity reaches 20%. You will need to contact the lending institution to let them know that you want to cancel PMI. Lending institutions request proof of 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.

Coastal Mortgage Corp. can help find out if you can eliminate your PMI. Give us a call: 504-866-5626.

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