Make Private Mortgage Insurance a Thing of the Past

While lending institutions have been obligated (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) at the time the balance dips below 78% of the price of purchase, they do not have to take similar action if the equity is above 22%. (There are some exceptions -like a number of "high risk' loans.) But if your equity rises to 20% (regardless of the original price of purchase), you can cancel your PMI (for a mortgage loan that past July 1999).

Keep a running total of payments

Keep track of your principal payments. Also keep track of how much other homes are being sold for in your neighborhood. Unfortunately, if yours is a recent mortgage 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

At the point your equity has reached the magic number of twenty percent, you are not far away from stopping your PMI payments, for the life of your loan. First you will tell your lender that you are asking to cancel your PMI. Lenders request proof of eligibility at this point. You can get proof of your home's equity by getting a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.

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

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