Make Private Mortgage Insurance a Thing of the Past

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For loans closed after July 1999, lending institutions are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan gets below 78 percent of your purchase amount - but not at the point the borrower earns 22 percent equity. (A number of "higher risk" loan programs are not included.) But if your equity reaches 20% (regardless of the original price of purchase), you are able to cancel PMI (for a loan closed after July 1999).

Do your homework

Analyze your statements often. Find out the purchase prices of other houses in your immediate area. Unfortunately, if yours is a recent loan - five years or under, you likely haven't started to pay much of the principal: you have been paying mostly interest.

The Proof is in the Appraisal

You can start the process of PMI cancellation at the time you're sure your equity reaches 20%. You will need to contact the mortgage lender to let them know that you wish to cancel PMI. Lending institutions ask for proof of eligibility at this point. You can get documentation of your home's equity by getting a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.

Colorado Home Mortgages, Inc. can answer questions about PMI and many others. Give us a call at 303-471-4445.