Make Private Mortgage Insurance a Thing of the Past

For loans made since 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 loan reaches 22 percent equity. (Certain "higher risk" morgages are not included.) But if your equity gets to 20% (no matter what the original price was), you have the legal right to cancel PMI (for a loan closed past July 1999).

Keep a running total of payments

Familiarize yourself with your mortgage statements to keep your eye on principal payments. Pay attention to the prices of other houses in your immediate area. If your mortgage is fewer than five years old, it's likely you haven't paid down much principal � you have paid mostly interest.

The Proof is in the Appraisal

At the point you find you've achieved at least 20 percent equity in your home, you can begin the process of freeing yourself from PMI payments. First you will let your lender know that you are asking to cancel your PMI. Lenders ask for 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.

ADVISORY MORTGAGE can answer questions about PMI and many others. Call us: 8102292820.