Canceling Private Mortgage Insurance

Beginning in 1999, lenders have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his loan balance (for a loan made past July of that year) reaches less than seventy-eight percent of the purchase price, but not when the loan's equity gets to more than twenty-two percent. (There are some exceptions -like certain "high risk' loans.) But you are able to cancel PMI yourself (for loans closed past July 1999) at the point your equity reaches 20 percent, without consideration of the original purchase price.

Keep a running total of payments

Familiarize yourself with your loan statements to keep your eye on principal payments. You'll want to stay aware of the the purchase prices of the houses that are selling around you. If your mortgage is under five years old, probably you haven't made much progress with the principal � you have been paying mostly interest.

Proof of Equity

You can start the process of PMI cancelation when you're sure your equity reaches 20%. You will need to notify your mortgage lender that you want to cancel PMI. Lending institutions require proof of eligibility at this point. Most lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your equity and eligibility for canceling PMI.

Northeast Bancorp of America, Inc. can answer questions about PMI and many others. Give us a call: (440) 234-9660.

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