Canceling 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 the purchase amount � but not at the point the borrower achieves 22 percent equity. (There are some exceptions -like some "high risk' loans.) But you are able to cancel PMI yourself (for loans closed past July 1999) when your equity gets to 20 percent, no matter the original purchase price.

Do your homework

Familiarize yourself with your monthly statements to keep a running total of principal payments. Make yourself aware of the prices of other homes in your neighborhood. If your mortgage is fewer than five years old, chances are you haven't greatly reduced principal � it's been mostly interest.

Verify Eligibility

You can start the process of canceling your PMI when you determine your equity has reached 20%. Contact your lender to ask for cancellation of your Private Mortgage Insurance. The lending institution will ask for documentation that your equity is high enough. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) verifies your equity amount � and almost all lenders require one before they agree to cancel.

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