Make Private Mortgage Insurance a Thing of the Past

For loans closed since July 1999, lenders are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan goes below 78 percent of the purchase price � but not when the borrower achieves 22 percent equity. (There are exceptions -like some loans considered 'high risk'.) The good news is that you can request cancelation of your PMI yourself (for your loan closing after July '99), regardless of the original purchase price, when the equity rises to twenty percent.

Verify the numbers

Familiarize yourself with your monthly statements to keep your eye on principal payments. Make yourself aware of the selling prices of other houses in your immediate area. Unfortunately, if you have a new mortgage - five years or under, you likely haven't been able to pay a lot of the principal: you have been paying mostly interest.

Verify Equity Amount

When you determine you have achieved at least 20 percent equity, you can start the process of canceling your Private Mortgage Insurance. You will need to notify your mortgage lender that you wish to cancel PMI. Lending institutions request proof of eligibility at this point. 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.

At ADVISORY MORTGAGE, we answer questions about PMI every day. Call us at 8102292820.