Make Private Mortgage Insurance a Thing of the Past

Beginning in 1999, lenders have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for loans closed after July of '99) goes down below seventy-eight percent of the purchase price, but not when the loan's equity reaches twenty-two percent or more. (Some "higher risk" loans are excluded.) But if your equity reaches 20% (no matter what the original price was), you have the right to cancel PMI (for a loan closed past July 1999).

Do your homework

Study your statements often. Also stay aware of what other homes are selling for in your neighborhood. You've been paying mostly interest if your mortgage loan closed fewer than 5 years ago, so your principal probably hasn't been reduced by much.

Proof of Equity

At the point your equity has reached the required twenty percent, you are not far away from canceling your PMI payments, for the life of your loan. First you will let your lender know that you are requesting to cancel your PMI. Then you will be required to verify that you have at least 20 percent equity. Usually lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your equity and eligibility for PMI cancellation.

Northeast Bancorp of America, Inc. can help find out if you can eliminate your PMI. Call us at (440) 234-9660.

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