Make Private Mortgage Insurance a Thing of the Past

For loans made after July 1999, lending institutions are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan goes under 78 percent of your purchase amount � but not at the point the loan reaches 22 percent equity. (Some "higher risk" morgages are excluded.) However, if your equity gets to 20% (no matter what the original purchase price was), you are able to cancel PMI (for a mortgage loan that past July 1999).

Verify the numbers

Familiarize yourself with your monthly statements to keep your eye on principal payments. Find out the purchase prices of other houses in your immediate area. Unfortunately, if yours is a recent mortgage - five years or under, you probably haven't been able to pay very much of the principal: you are paying mostly interest.

The Proof is in the Appraisal

Once your equity has risen to the desired twenty percent, you are not far away from stopping your PMI payments, for the life of your loan. You will first tell your lender that you are requesting to cancel PMI. Lending institutions ask for paperwork verifying your eligibility at this point. Most lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your home's equity and eligibility for canceling PMI.

ADVISORY MORTGAGE can answer questions about PMI and many others. Give us a call at 8102292820.