Eliminating Private Mortgage Insurance

For loans closed since July 1999, lending institutions are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance goes lower than 78 percent of your purchase amount � but not when the borrower earns 22 percent equity. (The legal obligation does not cover a number of higher risk mortgages.) However, you can actually cancel PMI yourself (for loans closed past July 1999) once your equity reaches 20 percent, no matter the original price of purchase.

Verify the numbers

Familiarize yourself with your mortgage statements to keep track of principal payments. Find out the purchase prices of other houses in your neighborhood. Unfortunately, if you have a new mortgage - five years or under, you probably haven't had a chance to pay a lot of the principal: you are paying mostly interest.

Verify Equity Amount

You can start the process of PMI cancelation as soon as you're sure your equity has reached 20%. You will need to notify your mortgage lender that you want to cancel PMI. Then you will be asked to submit proof that you are eligible to cancel. Most lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your home's equity and eligibility for PMI cancellation.

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