Make Private Mortgage Insurance a Thing of the Past

Although lenders have been required (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) when the loan balance gets under 78% of the purchase price, they do not have to take similar action if the equity is more than 22%. (There are exceptions -like a number of "high risk' loans.) But you are able to cancel PMI yourself (for mortgage loans made past July 1999) when your equity reaches 20 percent, without consideration of the original purchase price.

Verify the numbers

Keep track of your principal payments. You'll want to be aware of the prices of the homes that are selling around you. If your mortgage is under five years old, probably you haven't greatly reduced principal � it's been mostly interest.

Proof of Equity

When you determine you have achieved at least 20 percent equity, you can begin the process of getting PMI out of your budget. You will need to contact the mortgage lender to let them know that you want to cancel PMI. Lenders request paperwork verifying your eligibility at this point. Most lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your equity and eligibility for PMI cancellation.

Alerus Mortgage can help find out if you can eliminate your PMI. Give us a call: 952 417 8481.

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