Eliminating Private Mortgage Insurance

For loans made after 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 the purchase price � but not when the borrower earns 22 percent equity. (Some "higher risk" mortgage loans are excluded.) But if your equity rises to 20% (regardless of the original purchase price), you have the right to cancel the PMI (for a loan that after July 1999).

Do your homework

Keep a running total of each principal payment. Also stay aware of the price that other homes are selling for in your neighborhood. If your loan is under five years old, it's likely you haven't paid down much principal � it's been mostly interest.

The Proof is in the Appraisal

Once your equity has reached the magic number of twenty percent, you are close to canceling your PMI payments, for the life of your loan. You will need to contact the lending institution to alert them that you wish to cancel PMI payments. Your lender will request proof that your equity is at 20 percent or above. 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.

America's Money Source can answer questions about PMI and many others. Give us a call at 4078987559.