Make Private Mortgage Insurance a Thing of the Past

For loans closed after July 1999, lenders are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan gets lower than 78 percent of your purchase amount � but not at the point the loan reaches 22 percent equity. (Some "higher risk" morgages are excluded.) The good news is that you can cancel your PMI yourself (for your mortgage closing past July '99), no matter the original purchase price, once the equity climbs to twenty percent.

Keep a running total of payments

Keep track of your principal payments. Also keep track of the price that other homes are being sold for in your neighborhood. Unfortunately, if yours is a new mortgage loan - five years or under, you likely haven't started to pay very much of the principal: you have been paying mostly interest.

Proof of Equity

You can start the process of PMI cancelation when you you think that your equity has risen to 20%. First you will tell your lender that you are asking to cancel your PMI. Then you will be asked to submit documentation that you are eligible to cancel. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will document your equity amount � and almost all lenders require one before they agree to cancel.

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