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 goes below 78 percent of your purchase amount � but not when the loan reaches 22 percent equity. (There are exceptions -like a number of "high risk' loans.) But you have the right to cancel PMI yourself (for mortgages made after July 1999) when your equity reaches 20 percent, regardless of the original purchase price.

Keep a running total of payments

Familiarize yourself with your monthly statements to keep your eye on principal payments. You'll want to be aware of the the purchase prices of the homes that are selling around you. You are paying mostly interest if your loan closed fewer than 5 years ago, so your principal most likely hasn't lowered much.

Proof of Equity

You can start the process of canceling PMI as soon as you calculate that your equity has risen to 20%. You will first let your lending institution know that you are asking to cancel PMI. Your lender will request proof that your equity is high enough. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will be all the proof you need � and your lender will probably require one before they agree to cancel PMI.

At 1st Credential Mortgage Inc, we answer questions about PMI every day. Call us at 2817780805.